The US Securities and Exchange Commission (SEC) has begun a federal investigation into the accounting procedures of computer graphics chipmaker Nvidia.
The chipmaker said the SEC informed the company in January that it had begun an enquiry into its accounting practices, after reviewing company email messages which related to an earlier investigation into alleged insider trading by some non-executive employees.
Nvidia said it has also launched an internal inquiry into the recording of certain reserves and expenses related to the fourth quarter of fiscal 2000 and the first three quarters of fiscal 2001.
On a conference call with analysts, Nvidia chief executive Jen-Hsun Huang said the company was co-operating fully with the SEC inquiry.
Huang said the SEC is investigating whether $3.6m in product costs booked in the second and third quarters of fiscal 2001 should have been recorded in the first quarter.
The accounting worries overshadowed a strong quarter as Nvidia reported a 134 per cent increase in net income for the fourth quarter from a year ago, while revenue more than doubled.
Nvidia said it earned $73m, or 41 cents a share, for the quarter. Last year, net income came to $31.1m, or 19 cents a share.
Revenue was $499.9m, up 129 per cent from last year's $218.2m.
Last year the SEC investigated Nvidia employees for allegedly trading on advance information that the company had won a contract in March 2000 to provide chips for Microsoft's Xbox.
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