Nvidia said Wednesday that talks with regulators over the proposed $40 billion (about Rs. 2,97,905 crores) acquisition of British semiconductor technology company Arm are taking longer than expected.
The revelation came as Nvidia, the world’s largest maker of graphics chips for gamers and artificial intelligence chips for data centers, forecast third-quarter revenues above Wall Street expectations on Wednesday as it benefits from massive demand.
But investors have focused on whether Nvidia’s move to acquire Arm will pass regulatory scrutiny and close by March of next year, as Nvidia promised. Arm has long been a neutral supplier of technology to the chip industry, and Nvidia competitors like Qualcomm have objected to Arm falling into the hands of a rival.
In a statement, Nvidia Chief Financial Officer Colette Kress said the company is still confident the deal will close.
“While some Arm licensees have expressed concerns or objected to the transaction, and discussions with regulators are taking longer than originally thought, we are confident in the deal and that regulators will appreciate the benefits of the acquisition for Arm, its licensees and the industry should recognize.” she said.
Nvidia shares fell 2 percent, but rose later as executives forecast higher selling prices for gaming chips during a conference call with analysts.
“Many investors already think there’s little chance of the deal being approved in the end. If it’s blocked, I think they’ll collectively shrug their shoulders,” said Logan Purk, an analyst at Edward Jones.
The company estimated revenue in the current quarter at $6.80 billion (about Rs. 50,591 crores), plus or minus 2 percent. Analysts had expected an average of $6.53 billion (about Rs. 48,582), according to IBES data from Refinitiv.
Nvidia also beat expectations for second-quarter revenue with an increase of 68 percent to $6.51 billion (approximately Rs. 48,433 crores). Data center and gaming revenues were $2.37 billion (approximately Rs. 17,632 crores) and $3.06 billion (approximately Rs. 22,765 crores), respectively, surpassing analyst estimates of $2.3 billion (approximately Rs. 17,111 crores) and $2.94 billion (about Rs. 21,873 crores), according to data from Refinitiv.
The company said its adjusted earnings for the second quarter were $1.04 (approximately Rs. 77.36) per share, versus estimates of $1.01 (approximately Rs. 75.12) per share, according to data from Refinitiv.
Nvidia shares initially fell 2 percent in after-hours trading after the results were released, but later rose 2.8 percent.
© Thomson Reuters 2021