Going Into Earnings, 4 Questions for NVIDIA

Get ready NVIDIA (NASDAQ: NVDA  ) investors! Your company reports second-quarter earnings after the market closes on Thursday, August 8, and it's time to start thinking about what you should expect from the graphics chip specialist.

Of course, we already know shares of NVIDIA popped after the company beat estimates last quarter, and this time around analysts expect it to report earnings of $0.13 per share on $976.4 million in sales.

But earnings and revenue only paint part of the picture of how NVIDIA is really doing, so here are four other questions I'll be asking going into Thursday's announcement:

1. Is Tegra 4 gaining ground?
First, I want to see some progress on design wins for NVIDIA's newest Tegra 4 processors, particularly in the mobile space.

Remember, NVIDIA told us in February that its Tegra 4 processor line already had more design wins than Tegra 3 had in total, and this was a key part of management's claims that the company would be able to return to sequential growth during the second half of this fiscal year.

What's more, NVIDIA took a direct shot at Qualcomm's (NASDAQ: QCOM  ) dominance in smartphone chips when it unveiled its Tegra 4i, which stands as the company's first fully integrated 4G LTE mobile processor.

And while the Tegra 4i did massively outperform Qualcomm's existing chips at the time by a wide margin, Qualcomm took the news in stride as its Snapdragon 800 line was set to enter mass production in May. For those of you keeping track, remember that turned out to be plenty of time for the Snapdragon 800 to win a coveted spot over competitors like NVIDIA in Samsung's latest high-performing Galaxy S4 variant.

2. Is Shield living up to NVIDIA's expectations?
Speaking of Tegra 4-powered devices, I'd also love to know how NVIDIA's Shield mobile gaming device is selling.

If you recall, I'm not expecting Shield to actually move NVIDIA's revenue needle in the near future, but the company threw us a curveball by lowering Shield's price just one week prior to what was supposed to be its official launch on June 27.

Then, NVIDIA shocked expectant gamers by delaying the launch by over a month after they found an unnamed hardware defect in the final version of the device.

Finally, Shield hit store shelves last Tuesday and has garnered mostly positive reviews since then -- but has it turned out to be everything NVIDIA was hoping for?

3. Is the licensing business bearing fruit?
Next, NVIDIA also surprised us in June when the executive VP David Shannon took to the company's official blog to say NVIDIA would soon begin licensing its Kepler-based GPU cores and visual computing patent portfolio to device manufacturers.

Naturally, then, I'm sure I'm not alone in wondering how many of those manufacturers have signed on to take advantage of the more than $1 billion in R&D NVIDIA spends every year to improve its visual computing tech.

If NVIDIA can show some traction in the licensing biz, it'd be a huge step in making them even more indispensable to the world of computing than they already are.

4. How about that $1 billion promise?
Finally, I'm expecting an update on NVIDIA's previously announced promise to return an additional $1 billion to shareholders this fiscal year in the form of dividends and share repurchases.

After all, even though NVIDIA spends so much on R&D every year, at the end of last quarter it had no debt and more than $3.7 billion in cash at its disposal. As a shareholder, then, and with shares of NVIDIA trading at just 15.7 times last year's earnings (or 8.8 times when you back out all that cash), I certainly don't mind its taking the opportunity to buy back common stock while it's still cheap.

Foolish takeaway
These questions certainly don't represent an all-inclusive list of things to look for when NVIDIA announces on Thursday, but I do think it's a great place to start.

Rest assured, though, I'll be touching base again after the announcement to let you know what NVIDIA had to say.

In the meantime, with so many different companies trying to take advantage of the mobile revolution, it can be daunting to know how to profit in the space. Fortunately, The Motley Fool has released a free report on mobile named "The Next Trillion-Dollar Revolution" that tells you how. The report describes why this seismic shift will dwarf any other technology revolution seen before it and also names the company at the forefront of the trend. You can access this report today by clicking here -- it's free.


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