NVIDIA's (NVDA 5.67%) Nov. 8 fiscal Q3 earnings call was a big deal -- bigger than the usual earnings announcement. After a careful analysis of the ever-declining PC market, NVIDIA CEO Jen-Hsun Huang made a bold decision a while back, and made the jump to the mobile computing market. The potential was, and is, huge. According to a Gartner Research study, smart technologies -- phones and tablets -- will generate sales of 1 billion units in 2013.

But a big market doesn't necessarily equate to big earnings. The sector is littered with examples of wannabe suppliers. What NVIDIA proved to investors yesterday is that its strategic change in direction is working, and the future is extremely promising.

The numbers
As noted in my Nov. 8 article leading up to NVIDIA's announcement, analysts had steadily increased expectations the past several months. By the time NVIDIA's Q3 results rolled around, analysts had settled on a revenue increase of 11.6%, and an earnings jump of 3.4%, compared to Q3 of last year. Both estimates, as it turned out, sold NVIDIA's mobile computing processor business short.

Revenue for Q3 came in at a record pace of $1.2 billion, up 12.9% compared to NVIDIA's Q3 of 2012. Earnings also beat expectations, rising to $0.33 a share on a GAAP basis, $0.39 per share after removing non-recurring items. Non-GAAP gross margins also improved, and set yet another record, to 53.1%.

Now, for the really good news
There were two things leading up to NVIDIA's announcement mentioned in the Nov. 8 article: No. 1, would NVIDIA show growth in its new tablet market, particularly Google's (Nasdaq: GOOG) Nexus and the newly released Microsoft (Nasdaq: MSFT) Surface? Google is selling a million Nexus units a month, and by most analysts' accounts, Surface tablet sales are also booming. But what impact would Google and Microsoft tablet sales have on NVIDIA's bottom line?

And No. 2, isn't it about time, with solid operating cash flow and over $3 billion in cash on the balance sheet, to give back to shareholders?

NVIDIA answered both questions with a resounding affirmative. Regarding the impact on revenue from the Tegra 3 and smart technologies, Huang said, "Investments in our new growth strategies paid off this quarter in record revenues and margins." Huang went on to add, "And Tegra is powering some of the most innovative tablets, phones, and cars in the market."

As for all that cash? NVIDIA confirmed it will continue its $2.7 billion stock repurchase program and, even more important for shareholders, initiate a quarterly dividend of $0.075 a share, equal to 2.4%. 

This was a big quarter for NVIDIA; a chance to prove its decision to take a new, strategic direction is working. Even the slightly lower Q4 revenue guidance shouldn't dissuade investors from taking a good, hard look at NVIDIA. It was crunch time, and NVIDIA stepped up to the plate.