Exclusive Update

NVIDIA's (Nasdaq: NVDA) fiscal third quarter results were boosted by strong performance in its consumer product business. Total revenue rose 12.9% over last year to a record $1.2 billion, right in the middle of its outlook of $1.15 billion to $1.25 billion. Non-GAAP gross margin also hit a new high of 53.1%, which paved the way for adjusted earnings per share of $0.39.

Consumer product business revenue rose 27.6% to $243.9 million in large part to record revenue for its Tegra mobile application processors, which comprised 16% of total sales. Tegra continues to gain traction in the tablet market with high-profile wins like Google's Nexus 7 and Microsoft's Surface RT, among others.

The company's newest Kepler GPU chips are helping drive growth in the GPU business, which grew 14.7%. That's particularly impressive in the context of a sluggish PC market where global unit shipments were down 8.3% in the third quarter.

The professional solutions business increased a relatively modest 4.2%, as the Quadro business is being hurt by macroeconomic conditions, particularly in Europe. Gains in NVIDIA's Tesla offerings helped offset some of this weakness.

NVIDIA also announced a quarterly dividend of $0.075 per share, which translates into a yield of approximately 2.4% at current prices. The company is also extending its share repurchase program through the end of 2014.

For much of the year, NVIDIA has been facing supply constraints stemming from Taiwan Semiconductor related to 28-nanometer production for NVIDIA's Kepler chips. Taiwan Semiconductor has ramped up production throughout the year and CEO Jen-Hsun Huang said he's comfortable about the current balance of supply and demand, and Kepler channel inventory is on target.

NVIDIA has made a lot of progress over the years diversifying its business and weaning its dependence on the PC market, as 30% of sales are now generated outside of the PC market. That's up from 7% just three years ago. The Tegra "Grey" chip with integrated LTE is still on track for next year, which will give NVIDIA more ammo in its competition withQualcomm, although Grey revenue likely won't be a major contributor until 2014.

Fool contributor Evan Niu, CFA, owns shares of Apple and Qualcomm,. The Motley Fool recommends Apple, Google, and NVIDIA. The Motley Fool owns shares of Apple, Google, Microsoft, and Qualcomm,. The Motley Fool is short Sony. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.