Low PS3 sales may also hurt NVIDIA

It seems NVIDIA may be in a spot of trouble as a result of the PlayStation3’s slow going in retail. According to a report from the International Business Times, the graphics chip maker may take a hit in their overall share prices as a result of the console’s slow demand.

Michael McConnell of semiconductor analyst Pacific Crest had this to say about NVIDIA’s connection with Sony‘s PS3:

Sony royalties garnered by Nvidia from the PS3 build are expected to be the primary driver of Nvidia’s gross-margin expansion in fiscal 2008…. Although poor manufacturing yields on Blu-Ray diodes were the initial cause of PS3 unit constraints at retailers, we have seen evidence of weaker-than-expected consumer demand as availability has improved, likely stemming from overly high prices at retailers and a lack of compelling game titles.

Due to this, the analyst expects share prices to drop their earnings to US$ 1.67 per share, rather than the US$ 1.77 originally predicted. The price of NVIDIA shares are also expected to drop as a result, from US$ 45 to US$ 33.

It seems NVIDIA may be in a spot of trouble as a result of the PlayStation3’s slow going in retail. According to a report from the International Business Times, the graphics chip maker may take a hit in their overall share prices as a result of the console’s slow demand.

Michael McConnell of semiconductor analyst Pacific Crest had this to say about NVIDIA’s connection with Sony‘s PS3:

Sony royalties garnered by Nvidia from the PS3 build are expected to be the primary driver of Nvidia’s gross-margin expansion in fiscal 2008…. Although poor manufacturing yields on Blu-Ray diodes were the initial cause of PS3 unit constraints at retailers, we have seen evidence of weaker-than-expected consumer demand as availability has improved, likely stemming from overly high prices at retailers and a lack of compelling game titles.

Due to this, the analyst expects share prices to drop their earnings to US$ 1.67 per share, rather than the US$ 1.77 originally predicted. The price of NVIDIA shares are also expected to drop as a result, from US$ 45 to US$ 33.