Gaming card manufacturer NVIDIA Corporation (NVDA) recently launched two new products in the gaming card segment, namely the NVIDIA GeForce GTX 550 Ti graphics processing unit (GPU) and a new version of the NVIDIA 3D Vision wireless glasses kit, at a consolidated price of $149 million.
GTX 550 Ti is the latest addition to the NVIDIA Fermi line of consumer GPUs, which will help to deliver DirectX 11 (DX11) performance. This offers a new level of price/performance in the PC gaming segment, and will help maintain low volume with minimum power.
Moreover, NVIDIA 3D Vision has changed the total gaming experience, with photographic and video effects, which currently support more than 500 3D games, along with a group of hardware and software partners, and 3DVisionLive.com.
NVIDIA’s research and development (R&D) efforts remain on track. Despite the momentum in the Tablet and Handset segments, the company is working on a new product using the Tegra 3 platform. NVIDIA has accelerated the production of its quad-core applications processor codenamed “Kale-El,” which it plans to ship during the third quarter.
NVIDIA seems to have the right business approach, targeting some of the most significant growth areas in technology. These include cloud computing, mobile Internet and energy efficiency. While this will no doubt enhance its brand equity, we might notice a meaningful rise in R&D expenditure moving forward.
Another positive for NVIDIA’s GPUs is the increasingly visual computing environment. As a result, software is depending more on visual user interfaces rather than text. For instance, advanced versions of Windows require much more graphics resources than its predecessors, as it leverages improved graphics capabilities to enhance user experience. This will subsequently boost the demand for graphics cards and bring more business to the company.
The company reported decent fourth-quarter numbers, but is optimistic about its long-term growth given the gradual recovery in demand for graphic chips. NVIDIA will also receive $1.5 billion in a licensing agreement with Intel Corp. (INTL) that spans over six years.
However, the company’s performance may be slightly tempered by cyclical weakness,
economic slowdown in Europe and increased competition.
The company has a short-term Zacks #3 Rank (Hold rating).