Nvidia Shares Fall After 60 Percent Drop in Sales

Nvidia [NVDA] shares are down more than 13 percent in morning trading after its Q4 sales fell 60 percent and the company went deep into the red for the quarter and year.

The company reported a net loss of $30 million, or 5 cents per share on revenues of $3.4 billion for the year, which ended January 25. That compares to a net income of $797.6 million, or $1.45 per share on revenues of $4.1 billion in the previous year.

For the quarter, Nvidia’s net loss $147.6 million, or 27 cents per share on revenues of $481.1 million. That compares to a net income of $257 million, or 46 cents per share on revenues of $1.2 billion in the same quarter last year. The loss was well below Wall Street’s average estimate of a 9 cent loss.

“The environment is clearly difficult and uncertain,” said Nvidia President/CEO Jen-Hsun Huang. “Our first priority is to set an operating expense level that balances cash conservation while allowing us to continue to invest in initiatives that are of great importance to the market in which we believe we have industry leadership.”

Speaking to investors in its quarterly conference call, Huang said Nvidia expects to reduce that operating expense by $35 million from the current $300 million level by the end of Q2. While the company made no mention of layoffs to reduce those expenses, CFO Marvin Burkett said Nvidia has implemented a hiring freeze.

Nvidia cited a licensing deal with Electronic Arts [ERTS], THQ [THQI] and Take-Two Interactive [TTWO] that gives the publishers access to Nvidia’s PhysX physics engine.

The company also announced today that its Ion platform has been certified for Windows Vista and will be available in low-cost PCs starting at $299 this summer. These Ion-based PCs will deliver 1080p video and support for Microsoft’s [MSFT] DirectX 10 API, Nvidia said.