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Print 51 comment(s) - last by Chocobollz.. on Aug 14 at 2:48 PM

Chipmaker struggles with a net loss and being in the unfamiliar role of underdog

NVIDIA posted a troubled financial outlook for its fiscal Q2 2009, ending in July.  Now with the final numbers coming in, it is apparent that the company is bleeding money and facing the unfamiliar role of playing underdog to competitor AMD/ATI. 

Compounding NVIDIA's woes was the revelation that nearly all its laptop GPUs were defective.  Faced with a $196M USD charge to cover the replacement costs for GPUs and slowed sales, NVIDIA has announced for the first time in many quarters that it is in the red.

Jen-Hsun Huang, president and CEO of NVIDIA stated, "Our Q2 financial performance was disappointing. The desktop PC market around the world weakened during the quarter. And our miscalculation of competitive price position further pressured our desktop GPU business. We have a great product line-up and, having taken the necessary pricing actions, we are strongly positioned again. Our focus now is to drive cost improvements and to further enhance our competitiveness through the many exciting initiatives we have planned for the rest of the year."

In total, revenue for the quarter dropped to $892.7M USD, down from $935.3M USD a year prior.  Following the U.S. generally accepted accounting principles (GAAP); NVIDIA announced that it was in the red with a loss of $120.9M USD for the quarter.

Mr. Huang did not address the laptop problems in the earnings report.  Rather, he plugged the strong growth of the notebook GPU sales. 

While he acknowledged that NVIDIA may be in a bit of trouble, Mr. Huang expressed confidence that key NVIDIA technologies will help the company through.  Among these are PhysX support and CUDA -- a C language programming interface.  He added, "Though we approach the near term with caution, we remain very optimistic about the expanding universe of visual computing and the exciting growth opportunities made possible by CUDA, our general purpose parallel computing architecture."

NVIDIA does have a bit of additional cause for concern, however.  Long-time AMD rival Intel is jumping into the discrete graphics business.  NVIDIA is quite concerned about Intel’s Larrabee architecture and how the press interprets its significance – NVIDIA has even reached out to the press to shoot down “myths” surrounding Larrabee.



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Text Pop-up Ads
By glitchc on 8/13/2008 1:56:04 PM , Rating: 5
Since when did DT start posting articles with text pop-up ads?

quote:
Our Q2 financial performance was disappointing


quote:
U.S. generally accepted accounting principles (GAAP);


They're exceptionally annoying! They pop up while one is scrolling down to read the rest of the article and subsequent comments. Why is a high calibre news source such as DT sinking to this level?




RE: Text Pop-up Ads
By HeelyJoe on 8/13/08, Rating: 0
RE: Text Pop-up Ads
By BruceLeet on 8/13/2008 6:15:29 PM , Rating: 2
Someone complained about this the other day, and then someone replied

"firefox+adblock+ my friend"

Its useful cause its true.

The other day I couldnt review a benchmarking site because one of the sites wouldnt let me view their site unless I disabled Adblock, which is their only revenue I guess.

http://www.tweaktown.com/supportus.html


RE: Text Pop-up Ads
By Klober on 8/13/2008 7:21:47 PM , Rating: 1
Or, instead of switching browsers (or in the case you can't switch) you could always be a techie and troubleshoot how to turn them off. I believe it takes a total of 3 clicks. It took me maybe 60 seconds. And this solution is browser agnostic.


RE: Text Pop-up Ads
By BruceLeet on 8/14/2008 12:22:13 AM , Rating: 2
3 clicks in 60 seconds, yeah thats Internet Explorer alright.


RE: Text Pop-up Ads
By abhaxus on 8/14/2008 1:18:27 AM , Rating: 1
more like about 30 seconds to figure out where you go to turn them off and another click to turn them off when you get there :)


RE: Text Pop-up Ads
By Klober on 8/14/2008 12:56:27 PM , Rating: 2
Exactly. And doing it that way you'll never see them again on the site from which you disabled them (unless you clear your cookies or something equivalent). This works for almost all the pop-up text ads I've found on sites.

BTW, how does giving people an alternative to switching browsers equate to down-rating? Finicky crowd here...


RE: Text Pop-up Ads
By NullSubroutine on 8/14/2008 5:50:45 AM , Rating: 3
Disable javascript when you go there, then reenable when you leave.


RE: Text Pop-up Ads
By Chocobollz on 8/14/2008 12:48:11 PM , Rating: 2
Ok, the answer is actually very simple.

1) You use FF or IE (I assume) AND you have problems
2) I use Opera 9.51 AND I don't have problems

You see any correlations between them? :)

You know what you have to do now, right? :)


RE: Text Pop-up Ads
By Klober on 8/14/2008 1:00:47 PM , Rating: 2
A) The browser itself is not the issue.
B) Some people don't have the option of using a different browser.

Just disable the ads themselves. Easiest/quickest way. I use IE at work because I have no choice, otherwise I use Maxthon. True, Maxthon doesn't give me any issues, but while I'd love to use it everywhere it's just not an option at work. So I did the techie thing and troubleshot the issue and figured out that you can disable the ads through the ads themselves. Considering the site we're frequenting I'm surprised more people haven't done this! :P


RE: Text Pop-up Ads
By Chocobollz on 8/14/2008 2:48:03 PM , Rating: 2
quote:
(...) and figured out that you can disable the ads through the ads themselves.

Oh LOL? I haven't know that.

quote:
A) The browser itself is not the issue.

Really? And why I haven't see any ads here? I thought it was my browser.. Ok, lemme check by opening this page from IE..

A few minutes later..

Ok, I've tested it with IE and oh well, there's no ads too there, so I guess it wasn't the browser afterall.. maybe my firewall who did it.. LOL (I'm using Agnitum Outpost Firewall Pro 3.51 here)

EDIT!!

Oh! There's 1 text-ads here in IE. The ads is at the "Jen-Hsun Huang, president and CEO of NVIDIA stated, (...)" (the "CEO" word was highlighted in green color and when I hover the mouse-cursor on it, there's an ads popped up). So apparently, it was Opera which is doing its job right! Oh I love this browser! LOL Opera FTW! :)


Can of Whoop-ass
By pauldovi on 8/13/2008 1:05:20 PM , Rating: 5
Apparently Can's of Whoop-ass cost a lot!




RE: Can of Whoop-ass
By Bender 123 on 8/13/2008 1:44:57 PM , Rating: 5
Whoop-ass is cheap...Its the "Whoooops-ass" that costs alot.


RE: Can of Whoop-ass
By sgtdisturbed47 on 8/13/2008 2:12:15 PM , Rating: 1
I'm not too concerned. Many companies are struggling right now due to the crappy economy. Give it time and they will bounce back. They always do.


RE: Can of Whoop-ass
By gunzac21 on 8/13/2008 11:24:14 PM , Rating: 2
I have something I want to sell you.


RE: Can of Whoop-ass
By Ringold on 8/14/2008 5:15:58 AM , Rating: 2
Lets not use the struggling economy excuse; it never stops the top-performers from continuing to perform. Intel's not bleeding money, nor is Apple, RIM, Cisco, etc.

I wont say the economy doesn't have an impact, I'm saying it separates the men from the boys, so to speak.


RE: Can of Whoop-ass
By therealnickdanger on 8/14/2008 7:49:37 AM , Rating: 2
Don't confuse a poor product with a bad economy.


NV needs to get into the CPU biz
By phatboye on 8/13/2008 2:05:35 PM , Rating: 2
I predicted hard times for NV ever since both Intel and AMD decided to get more involved in discrete graphic processing units. And even though NV has has been on a roll for the past few years I always wondered how long that would last. NV can keep making claims that their products will make CPUs irrelevant all they want but the reality is that will never happen. My hope is that Nvidia and via could become stronger partners and create a platform that rival similar offerings from Intel and AMD. Nvidia needs a partner in the CPU business in order to survive and right now it looks like both Intel and AMD are more concerned with pushing their own GPUs and chipsets than having to deal with NVidia.




RE: NV needs to get into the CPU biz
By StevoLincolnite on 8/13/2008 2:30:15 PM , Rating: 1
Does anyone know what Team did the GT200 series?
Because it honestly feels like the 3dfx Team did the GT200 series much like they did with the Geforce FX series, for some reason the GPU's just don't seem to be what they "Should" be throwing out performance wise.

I would love for a company like Via to Purchase nVidia and start rolling out complete platforms at a competitive price, for instance Having a GPU+CPU on the same PCI-E or AGP Card would be awesome as an "Upgrade" to some older systems which are socket limited.


RE: NV needs to get into the CPU biz
By Targon on 8/14/2008 10:46:12 AM , Rating: 2
The problem with this idea is that the PCI, AGP, and even PCI Express bus just wouldn't be a good place for a CPU to go due to bandwidth limitations. AMD had a solution for this with a slot for HyperTransport connectivity(HTX as I recall), but it never took off.

The idea of a slot for "future CPU upgrades" goes WAY WAY WAY back to the days of the 286. A company called ALR(Advanced Logic Research) put a slot in some of their 80286 based systems that would allow for an 80386sx daughter card. The bus may have been 16 bit, but the daughter card could handle 32 bit instructions.

Cost becomes the true issue, because end users do NOT do their own upgrades, so pay for the labor in addition to parts. Motherboard+CPU+labor to upgrade an old computer(including dealing with the OS related issues) may cost more than $400. At that point, why not just replace the whole computer, which would take less time and effort.


By Chocobollz on 8/14/2008 12:58:58 PM , Rating: 2
quote:
I would love for a company like Via to Purchase nVidia (...)

Don't you have it backwards? :)


RE: NV needs to get into the CPU biz
By KingstonU on 8/13/2008 2:46:41 PM , Rating: 2
This is an interesting idea, especially since VIA has just dropped out of the chipset market to concentrate on their CPUs and Nvidia still makes chipsets. A partnership may benefit both and may not be too far fetched.


RE: NV needs to get into the CPU biz
By mindless1 on 8/13/2008 9:20:41 PM , Rating: 2
Via was losing competitiveness in the chipset market and their CPU really isn't anything special from a design perspective, nVidia would do as well to go it without them.


By Spoelie on 8/14/2008 6:12:23 AM , Rating: 2
Via has some very valuable x86 licenses afaik


By Spoelie on 8/14/2008 6:13:02 AM , Rating: 2
nvidia + chipsets may be a dead end


Oh what excuses!
By Icelight on 8/13/2008 1:49:56 PM , Rating: 5
quote:
And our miscalculation of competitive price position further pressured our desktop GPU business.


Ha! Guess Nvidia wasn't paying attention to ATis constant news about giving up the old monolithic GPU paradigm...or they were dumb enough to think ATi would price their "cheaper" card at $650...

Better yet, Nvidia pulled a Sony, thinking that they could remain at the top irrespective of what prices they charged.




Just Curious
By swizeus on 8/13/2008 6:54:17 PM , Rating: 2
Is it 2009 or 2008 ?




RE: Just Curious
By TomZ on 8/13/2008 7:14:08 PM , Rating: 3
good on them
By Pessimism on 8/13/2008 2:15:12 PM , Rating: 2
This is what happens when you produce a defective product and try to throw sand in people's eyes when you're called on it. Because of their gross dishonesty and negligence in disclosing specifically which graphic chips are defective I am selling my nvidia gpu'ed thinkpad and 8800gt video card and boycotting future purchases from the company.




RE: good on them
By rudolphna on 8/13/2008 7:52:53 PM , Rating: 2
Buy a Radeon 4850 and a ATi Xpress 1250 replacement. Both Kick ass. :)


Underdog?
By Lakku on 8/14/2008 12:15:12 AM , Rating: 2
Wasn't nVidia the underdog at the launch of the 9700? I think they were, and were for quite sometime. They never really regained true superiority until the late 7 series and 8 series GPUs. I don't think they are in unfamiliar territory, only that it's been over a year and a half since they have been where they are now. Either way, nVidia didn't exactly hemorrage money like AMD/ATi is doing, so I don't see a lot of trouble down the road that will affect them but not affect everyone else in the chip business not named Intel. I think everyone is missing the fact a die shrink of the GT200 series chips would yield faster and cheaper products, thus better competing if not surpassing ATi's lineup as of right now (yes, ATi is not resting obviously, but if you look at the two chip designs, ATi can't really shrink any further or get a lot more speed out of the chips they have right now), though the damage to the image already done could linger for awhile, ala the 5800 days. Anyway, competition is good, and when you can get the power of the 4850 for its price, or a GTX260/4870 for that price, it's good for all of us.




RE: Underdog?
By Ringold on 8/14/2008 5:19:47 AM , Rating: 2
I don't think it took quite until the 7 series. Wasn't the 6600GT a popular mid-range card?


By wingless on 8/13/2008 1:54:13 PM , Rating: 2
One thing is for sure, AMD and Nvidia sure as hell don't work together to fix prices. Maybe ATI did back in the day before AMD came along to buy them but not anymore LOL.




Only half the story........
By kilkennycat on 8/13/2008 8:28:57 PM , Rating: 2
It seems as if this article only told half the actual story...

nVidia actually posted an operating profit of 13 cents per share for the quarter. Yes, this was well down from the operating profit for the previous quarter, but it was still an operating PROFIT !!

nVidia's nearest competitor (AMD) posted a net loss of $1.189 billion last quarter with an operating LOSS of $146 million. Using current stock values, AMD is capitalized at ~ $3billion dollars vs ~ $7billion for nVidia. Regardless of ATi's current success, AMD is truly gushing red-ink in terms of loss per share. (And with Intel's Nehalem coming in all sorts of flavor starting in Q4 2008, it is difficult to see how AMD can pull out of this dive, no matter how well ATi succeeds..)

nVidia's net loss of $120million was due to the subtraction of the $196million charge (plus other one-time adjustments) from the operating profit. And nVidia still has ~ $700 million "in the bank" (after the loss) with zero long-term or short-term debt vs AMD's ~ $4billion net debt (long-term debt minus short-term "cash").

Yes, nVidia has experienced the results of a serious QC/production mis-step combined with arrogant management assumptions that blindsided them to competitive threats. However, this is the same company and same core personnel that saw the company through the FX5800 debacle, and which is far stronger both technically and financially today that at that time.




2009?
By collegeguypat on 8/13/08, Rating: -1
RE: 2009?
By SpaceRanger on 8/13/08, Rating: -1
RE: 2009?
By Flunk on 8/13/08, Rating: -1
RE: 2009?
By JasonMick (blog) on 8/13/2008 12:45:16 PM , Rating: 5
Don't you have a bridge to hide under, troll??

Read the press release, that is linked before you make dumb comments.


RE: 2009?
By JasonMick (blog) on 8/13/2008 12:44:06 PM , Rating: 5
It's not in the future, its now. The fiscal quarters are merely labeled a year ahead because:

A) Its NVIDIA and everything has to have a confusing name
...and more importantly
B) Often the fiscal or tax year is specifically established not to match the calendar year (also called natural year) (source: Wikipedia)


RE: 2009?
By collegeguypat on 8/13/2008 12:46:05 PM , Rating: 2
My bad, I thought it was a typo since most companies are posting their Q2 2008 info soon.


RE: 2009?
By SpaceRanger on 8/13/08, Rating: -1
RE: 2009?
By JasonMick (blog) on 8/13/2008 12:51:38 PM , Rating: 5
My suggestion to you: pick up a business text book.

The previous article refers to calendar quarter 2. Q2 2008 -- April-July.

This article refers to fiscal quarter 2009, fiscal Q2 2009. Every company's fiscal quarters can very in what they are compared to calendar quarters.

Two very different things. If you did a small amount of reading in business you would realize this.


RE: 2009?
By AndreasM on 8/13/2008 12:57:00 PM , Rating: 2
While there are often typos on Dailytech, this is not one of them.

Straight from the horse's mouth:

NVIDIA Corporation ( Nasdaq: NVDA) today reported financial results for the second quarter of fiscal 2009 ended July 27, 2008.

Source: http://www.nyse.com/interface/jsp/NHDetail.jsp?Req...


RE: 2009?
By daveinternets on 8/13/2008 6:16:20 PM , Rating: 2
Someone slept through Business class :(


RE: 2009?
By rudolphna on 8/13/08, Rating: 0
RE: 2009?
By collegeguypat on 8/13/2008 12:48:01 PM , Rating: 2
Also, the article you link to states: "The economic repercussions of NVIDIA's slippage are already visible. NVIDIA announced yesterday that it was going to turn in revenue of $875 million to $950 million for Q2 2008, which ends July 27. This is significantly lower than the current analyst expectations of $1.1 billion." Which has Q2 2008 listed in it, not 2009.

-Patrick


RE: 2009?
By Brandon Hill (blog) on 8/13/2008 1:01:39 PM , Rating: 2
quote:
For the second quarter of fiscal 2009, revenue decreased to $892.7 million compared to $935.3 million for the second quarter of fiscal 2008, a decrease of five percent. For the six months ended July 27, 2008, revenue increased to $2.05 billion compared to $1.78 billion for the six months ended July 29, 2007, an increase of 15 percent. During the second quarter of fiscal 2009, NVIDIA recorded a $196 million charge against cost of revenue to cover anticipated customer warranty, repair, return, replacement and associated costs arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products used in notebook systems.

http://phx.corporate-ir.net/phoenix.zhtml?c=116466...


RE: 2009?
By Bender 123 on 8/13/2008 1:16:43 PM , Rating: 4
Thanks for joining in. For the lolcats out there and the 1337 crowd, businesses generally use the financial year date that marks the end of the time period.

This means the company i work for, because it is on June 30th year end, is currently in 1st quarter 09. Nvidia, due to their year starting in February is going to be in 2nd quarter 09, even though the time frame overlaps with calendar 2nd quarter 08.

These aren't the droids you are looking for, they can go about their business, move along.


RE: 2009?
By Titanius on 8/13/2008 3:46:37 PM , Rating: 2
You forgot: *waves hand* before the droid phrase.

But you are absolutely right, and people should wake up and read a little more about the confusing world of business.


RE: 2009?
By Calin on 8/14/2008 3:18:25 AM , Rating: 2
You should also explain why the fiscal year is not starting on New Year's Eve. I have some idea about why, but I might be wrong, so I'll better listen for someone who know about it.


RE: 2009?
By Bender 123 on 8/14/2008 9:36:03 AM , Rating: 2
I would assume many tech companies try to allow proper run out of holiday orders when setting their fiscal calenders. This allows them to take orders, build, ship product and realize payment in a net 15/30 accounting environment.

This means a company can get a last minute push to boost earnings before they post for the shareholders to see (very good in the what have you done lately stock market world...).

That and many companies avoid the holiday season for closing books, because of vacations, stress and other issues around the holidays that limit staff availability for accounting.


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