The third quarter was a breather for Nvidia, but it appears that financial analysts have begun zeroing in on the company with product concerns again.
Those rather short-term concerns are, for the most part, focused on the company's core business: GPUs for PCs. Forbes reported that Oppenheimer analyst Rick Schafer cut his rating on Nvidia shares to Perform from Outperform and canceled his $17 price target for the company.
That was a rather dramatic move, given Nvidia's strategy to diversify its business. However, Schafer still indicated that any exposure to the PC business is not seen as an advantage these days. Forbes quoted him saying that Nvidia is "the only traditional PC vendor with a credible mobile diversification strategy," while adding that "most of its GPU share gains are now reflected in estimates" and cautioning "the absence of share gains leaves [Nvidia] increasingly exposed to secularly declining PC units."
Translation: If you depend on the PC these days, you are screwed.
Schafer's advice was to leave Nvidia alone for the time being and wait until Nvidia's non-PC business becomes "more meaningful". Of course, that non-PC business has also its issues, especially since Nvidia had high hopes for Microsoft's Surface RT tablet. If it is true that Microsoft is cutting Surface RT order from four to two million units in Q4, Nvidia is sitting on two million Tegra 3 processors that had been reserved for Microsoft's tablet. Windows RT may also have some launch issues, further impacting Nvidia's Tegra 3 sales.
However, Nvidia is one of those tech companies that may be easily able to wait out the current recession and any Windows 8 problems. The company has more than $3.4 billion cash on hand.