For the latest fiscal quarter, Nvidia saw both revenue and earnings go down compared to the same quarter a year ago.
NVIDIA reported revenue for the second quarter of fiscal 2014, ended July 28, 2013, of $977.2 million, up 2.4 percent from $954.7 million in the previous quarter. GAAP earnings per diluted share were $0.16, up 23.1 percent from $0.13 in the previous quarter. Non-GAAP earnings per diluted share were $0.23, up 27.8 percent from $0.18 in the previous quarter.
"The GPU business continued to grow, driving our fourth consecutive quarter of record margins," said Jen-Hsun Huang, president and chief executive officer of NVIDIA. "We also began shipping GRID virtualized graphics, which puts the power of NVIDIA GPUs into the datacenter. We look forward to a strong second half, with new Tegra 4 devices coming to market, SHIELD moving beyond the U.S. and broader sampling of Project Logan, our next-generation Tegra processor, which brings Kepler, the world's most advanced GPU, to mobile."
The company is expecting Tegra chip revenue to drop by as much as 40 percent this year, with the company indirectly blaming Microsoft's Windows RT OS for the decline.
"We don't expect as much return from the investment as we had hoped," CEO Jen-Hsun Huang said on a Thursday conference call. He said the expected shortfall was related to one particular platform, and though he didn't name it, the reference to Windows RT was clear.
Microsoft and Nvidia worked together to make Windows RT operate on Nvidia's Tegra 3 chips. Microsoft's Surface RT tablet, Asus' VivoTab RT and Lenovo's Yoga 11 are among the Windows RT tablets that have been introduced with Tegra 3 chips. Lenovo has already pulled sales of Yoga 11 on its website.
Nvidia is also working with Microsoft on the next version of the Surface RT,
Huang revealed during an interview with CNet. He stated that Microsoft Outlook, which is not available for current Windows RT models, will be "the killer app." Microsoft announced in June that Windows RT 8.1 will add Outlook support.
In an attempt to boost adoption of Surface RT, Microsoft recently slashed the device's price by $150, bringing the base model down to $349.
Microsoft's Surface Pro, which runs the full version of Windows 8, was also recently discounted. It dropped by $100, making the base model $799.