What NVIDIA brings to the table is expertise in graphics. After the Tegra 4 will come the Tegra 5, and this chip will feature a mobile version of the company’s Kepler GPU found in discrete graphics cards. Earlier this year the company showed off Battlefield 3, a demanding PC game, running on the Tegra 5. This was compared to the graphics capabilities of the latest iPad in the video below:
NVIDIA Corporation (NASDAQ:NVDA) is attempting to bring PC-quality graphics to tablets, and it will be a huge leap forward. QUALCOMM, Inc. (NASDAQ:QCOM) will likely be lightyears behind in the graphics department, and this should give NVIDIA an advantage in high-end tablets.
Dividends, buybacks, and cash
Earlier this year NVIDIA announced a massive $1 billion plan to return money to shareholders. In addition to its $0.075 per share quarterly dividend, which should total around $200 million for the year, the company began buying back shares and expects to spend the full $1 billion this year. The company has plenty of cash to accomplish this, with $3.7 billion on the books at the end of the quarter. This cash represents about 43% of the market capitalization.
The dividend yields about 2.15%, not as high as some other tech stocks but respectable nonetheless.
The bottom line
NVIDIA Corporation (NASDAQ:NVDA) generates around $1 per share of free cash flow annually, and with about $6 per share in cash and a share price around $14 the stock is cheap even without the prospect of significant growth. But starting with the launch of Tegra 4i, and later Tegra 5, the mobile division should begin to grow again. And if NVIDIA can capture significant share from Qualcomm then the company could see exceptional growth going forward. Tablets could be transformed into real gaming machines, on par with consoles, and if that happens NVIDIA will be at the forefront.
The article An Earnings Beat and a Bright Future originally appeared on Fool.com and is written by Timothy Green.
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