Merrill cuts Nvidia to 'sell'; stock falls
 

Reuters
UPDATE - Merrill cuts Nvidia to 'sell'; stock falls
Monday September 29, 4:20 pm ET
(Adds ATI close, updates Nvidia to close)

LOS ANGELES, Sept 29 (Reuters) - Shares in graphics chip designer Nvidia
Corp. (NasdaqNM:NVDA - News) closed down more than 5 percent on Monday after
brokerage Merrill Lynch cut its rating on the stock to "sell," citing
concerns about market share.

Merrill analyst Joseph Osha said Nvidia risked losing market share to rival
ATI Technologies Inc. (Toronto:ATY.TO - News; NasdaqNM:ATYT - News), which
is locked in a battle with Nvidia across the entire range of desktops, from
high-end enthusiast machines that cost thousands of dollars to the most
basic family models.

"We believe that Nvidia may be losing share in what has until now been its
stronghold -- desktop graphics processors," Osha said in his note, cutting
his rating from "neutral," adding that checks in Taiwan indicated that ATI
could begin gaining on Nvidia in the fourth quarter of this year.

"Issues that the company has had with its positioning in the mobile
computing and chipset markets are well understood, but we see no signs that
either business is about to reverse for Nvidia," he added.
Osha cut his earnings-per-share estimate for the January quarter, Nvidia's
fiscal fourth, to 5 cents from 11 cents, while cutting his revenue estimate
to $436 million from $465 million. For fiscal 2005, ending in January 2005,
Osha cut his EPS estimate to 53 cents from 75 cents.

Nvidia shares closed off 91 cents, or 5.4 percent, at $15.95 on Nasdaq,
while ATI shares finished up 68 cents, or 4.7 percent, at $15.11 on Nasdaq.