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Nvidia takes Xbox write-off hit

Time: 05:08 EST/10:08 GMT | News Source: The Register | Posted By: Alex Harris

Graphics chip vendor Nvidia Corp has been forced to write off inventory worth $21m as demand for PCs slowed. However, the figure includes $7m for chips for Microsoft Corp's Xbox, suggesting that the Redmond, Washington-based giant is struggling in its battle with market leader Sony Corp's PlayStation2. Nvidia is already in a dispute with Microsoft over the price it pays for chipsets for the Xbox, which the companies have agreed to send to arbitration. But the write-offs suggest that its relationship with Microsoft is damaging its bottom line.

In the second quarter to July 28, net income was $5.2m, down from income of $32.9m on revenue 64.6% higher at $427m. At the mid-term stage, net income was up 48.5% at $88.5m on revenue that increased 101.7m to $1bn. Santa Clara, California-based Nvidia warned earlier this month that its revenue would be down about 26% on the previous quarter because of the weakness in the PC market, though it can still boast annual growth rates that most in the industry will envy.

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