Can Shield Win the Game for NVIDIA Corporation (NVDA)?

NVIDIA Corporation (NASDAQ:NVDA) has pioneered the art and science of visual computing. The company’s technologies are transforming a world of displays into a world of interactive discovery – for everyone from gamers to scientists, and consumers to enterprise customers. But has the delay in its latest gaming device release worked for or against the company’s new venture plan? Let’s take a look.

The plan

NVIDIA Corporation (NASDAQ:NVDA), a graphics-chip specialist, announced its plan of launching a new portable gaming device called Project Shield at the Consumer Electronics Show held in January.

The unique selling point of Shield was that it used NVIDIA Corporation (NASDAQ:NVDA)’s latest chips and also had a built-in display to play advanced games while on the go. This way it had an upper hand compared to Ouya and GameStick because these worked only when plugged into a separate display. It also attempts to be a competition to many video game consoles and brands like Sony Corporation (ADR) (NYSE:SNE) and Nintendo (NASDAQOTH:NTDOY.PK), which are pioneers in this field.

SNE Net Income Quarterly data by YCharts

The failure

The plan did not seem to execute as expected. Just some days before the release of Shield its price was cut down from $349 to $299. Neither Sony Corporation (ADR) (NYSE:SNE) nor Nintendo is new to cutting down prices, but it was not hard to gauge that low market demand made the company take such a step just some days before the release.

Only if this was not enough, there came another announcement which made the investors give a second thought about the position of the company. The so-awaited gaming gadget’s launch was postponed and this announcement was made just one day before the device was to be launched. NVIDIA Corporation (NASDAQ:NVDA) said that a mechanical issue needs to be resolved and hence the delay. This will make merchants cautious about investing into a device where a mechanical defect came into picture just one day before the actual release date.

By the numbers

NVDIA earned $77.9 million per share on sales of $954.7 million last quarter. Analysts had expected revenue of $940.6 million.

For more than two years now, NVIDIA Corporation (NASDAQ:NVDA)’s stock price has been lying between $10 to $20. Shield could have been able to raise the stock price, but the unexpected price cut and the even more unexpected delay in its launch have raised questions. For sure its competitors, Sony Corporation (ADR) (NYSE:SNE) and Nintendo should be happy.

NVDA data by YCharts showing NVDA’s last two years price range.

The silver lining

Every cloud has a silver lining and so does NVIDIA Corporation (NASDAQ:NVDA). After all, we know gaming devices is not NVIDIA’s major revenue sector. Shield is just a try to take that one extra step. The company is greatly relying on its Tegra and Icera mobile chips and its GRID cloud-based graphics cards.