SANTA CLARA, Calif. -- High-flying Nvidia Corp. today announced that the U.S. Securities and Exchange Commission (SEC) has initiated a review of the company for certain accounting practices.
The Santa Clara-based graphics IC maker said the SEC is reviewing the recording of certain reserves and the timing of certain expenses relating to the fourth quarter of fiscal 2000 and the first three quarters of fiscal 2001. Fiscal 2000 ended on Jan. 30, 2000, and fiscal 2001 ended on Jan. 28, 2001.
The probe comes at a time when U.S. corporations are facing greater scrutiny over accounting practices after energy giant Enron Corp. financially imploded while hiding millions of dollars in losses. Nvidia said it has initiated its own internal review of its records, and it is fully cooperating with the SEC.
The review represents the second SEC probe for Nvidia. The SEC is also looking into a previously announced investigation of alleged insider trading by certain non-executive employees (see Nov. 20 story ). In this case, Nvidia has provided e-mails and other materials to the SEC for the period from December of 1999 to March of 2000. Based on review of these materials, the SEC raised two specific questions about Nvidia's accounting practices:
*The recording of reserves in the fourth quarter of fiscal 2000 and the first quarter of fiscal 200; and,
*The possibility that certain product costs of up to $3.6 million should have been recorded in the first quarter of fiscal 2001, but were recorded in the second and third quarters in that same year.
Nvidia said it continues to cooperate with the SEC, but the news put a damper on its strong financial results for the last fiscal quarter. The company today reported sales of $499.9 million for the fiscal fourth quarter, ended Jan. 27, up 129% from $218.2 million in the same period last year. The revenues were up 25.9% sequentially from $370.2 million reported in the prior quarter.
Actual net income was $73.0 million, or $0.41 per diluted share, compared to $31.1 million, or $0.19 per diluted share, a year ago. It posted a profit of $44.7 million in the previous period.
For the year, it reported sales of $1.37 billion, an increase of 87% compared to revenues of $735.3 million a year ago. Actual net income for the year was $177.1 million, or $1.04 per diluted share, compared to a profit of $99.9 million, or $0.63 per diluted share, a year ago.
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