Print 21 comment(s) - last by TheJian.. on Nov 13 at 7:00 AM

NVIDIA unleashes its metaphorical can of "whoop ass"

There was a time -- back in 2010 -- when NVIDIA Corp. (NVDA) looked a bit lost.  A resurgent Radeon brand, now owned by Advanced Micro Devices, Inc. (AMD), was punishing it in the discrete graphics market with the Radeon HD 5000 series devices, and analysts were scratching their heads in puzzlement at NVIDIA's focus on GPU computing.  

And NVIDIA's Tegra system-on-a-chip effort was largely written off, as NVIDIA couldn't seem to figure out what it wanted to do with it -- netbooks? Mobile devices?  No one could quite tell.

I. A Young Power in the Mobile Market

Fast-forward three years and NVIDIA is in a far different -- and far better -- position.  GPU computing is an exploding field and NVIDIA has large purchase orders from the hottest new deployments.  It's back to scoring wins in the gaming graphics market.

And most importantly Tegra has exploded, seizing a commanding stake in the mobile device system-on-a-chip (SoC) market.

In calendar/fiscal Q3 2012, NVIDIA posted large earnings and revenue surprises, delivered thanks to its SoC and GPU market gains.  Revenue fell in at $1.204B USD (GAAP), pleasantly above the consensus of $1.192B USD estimated by 33 analysts surveyed by The Financial Times.

NVIDIA Tegra chip
Tegra 3 drove NVIDIA to a big profit surprise.

But much like system-on-a-chip archrival Qualcomm, Inc. (QCOM), the biggest surprise lay not on the revenue, but on the net income (profit) front.  NVIDIA pocketed a whopping $209M USD, ($0.33 USD/share), above the most optimistic estimate of $203M USD ($0.32 USD/share) from the analyst crowd, and even higher above the average estimate of $187M USD.

NVIDIA's at times colorful and divisive chief executive officer and president, Jen Hsun Huang crowed, "Investments in our new growth strategies paid off this quarter in record revenues and margins.  Kepler GPUs are winning across the special-purpose PC markets we serve, from gaming to design to supercomputing. And Tegra is powering some of the most innovative tablets, phones and cars in the market."

The chipmaker decided to share the wealth with its shareholders, offering up a 7.5 cent dividend.

Capital expenditures for NVIDIA have grown as the company sharpens its focus on bleeding edge system-on-a-chip research.  NVIDIA estimates that it will spend $50M to $60M USD next quarter on R&D and other CAPEX.  

II. Gloom for Q4, But It Could be Worse

Looking ahead, while NVIDIA's Q3 results mirror Qualcomm's, its Q4 estimates are gloomier than its rivals.  NVIDIA estimates that revenue will dip to between $1.025B and $1.175B USD on a slowing global economy, versus the traditional bump in the holiday season.

One possible reason why NVIDIA is more worried than Qualcomm is that much of its earnings are still driven by sales of high-end (Kepler) hardware (GPUs) for traditional consumer and enterprise systems.  When the economy slumps, these sales tend to suffer the most, as users consolidate their buying power towards cheaper mobile devices.  In that regard, a mix mobile/traditional chipmaker like NVIDIA will likely be hurt more by a downturn than a solely mobile-centric chipmaker like Qualcomm.
GTX 580 3/4 view
A slowing economy is expected to dent NVIDIA's Q4 earnings.

However, NVIDIA's better-than-expected earnings do represent good news in a couple of ways.  First, NVIDIA and Qualcomm represent a reasonably good barometer by which to gauge the health of the mobile market.  And by the looks of it, mobile is flourishing at a time when other less fortunate markets find themselves facing tough financial questions.

Second, NVIDIA enjoys a key psychological advantage over Qualcomm in that it's pumping out quad-core units of its latest and greatest Tegra 3 processor, while Qualcomm's current Snapdragon 4 offerings are mostly constrained to dual-core CPUs.  That's a big reason why NVIDIA is thus far outpacing Qualcomm in design wins in the emerging Windows RT ARM-based laptop/hybrid device market.  

Traditional PCs demand more power, and NVIDIA has been the most aggressive about push higher core-counts in its mobile chips.  That decision will likely pay off for the company, and help it ride out the storm ahead in the discrete graphics market.

Sources: NVIDIA, FT [analyst estimates]

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Nvidia GPU market
By sharkbaitnate on 11/9/2012 12:43:44 PM , Rating: 1
Unless you have been ignoring Kepler GPUs, Nvidia actually leads the GPU market and has better price/performance than their competition. Of course, this statement is made with a disclamer.

AMD has lower performing GPU technology with higher price versus performance numbers. They also have smaller market share than Nvidia. That is, if you talk about discrete cards only. If we include integrated systems, then you have to include Intel and integrated AMD systems, and you find Nvidia in 3rd. Should these integrated systems be included in GPU assessments? From a future looking business perspective, sure, as they will have a real impact on sales of discrete cards. But from a market standpoint? Not at all. An integrated chip can't be included in GPU sales numbers because it is not a GPU. A GPU is an optional component of a computer that improves performance. You can run the system on CPU computational power only, with integrated chipsets, but this is not truly a GPU system, as the CPU is still doing the heavy lifting.

Only below the Geforce 650 is AMD a better option for the price point.

RE: Nvidia GPU market
By ipay on 11/11/2012 3:22:03 AM , Rating: 4
Actually with the latest drivers (Catalyst 12.11) AMD has higher performance across the board in discrete cards.

Add to that their new triple A game bundle for HD7XXX cards and they have both the best value and performance for anyone looking to upgrade.

RE: Nvidia GPU market
By spaced_ on 11/12/2012 3:23:01 AM , Rating: 2
This only seems to show desktop GPUs.

What about the rather large mobile GPU space?

RE: Nvidia GPU market
By TheJian on 11/12/2012 11:40:20 AM , Rating: 2
Against ref cards. Which only a fool buys as they're no cheaper than heavily OC's Nvidia's out of the box. Does anyone actually sell REF clocked nvidia cards? So I take those benchmarks with a pinch of salt at least. They could at least use a retail card. If you don't get an extra 10-15% free out of the box (no need to modify, they're SOLD OC'd out of the box) you're an idiot.

And not with R310 drivers - Gee didn't take long did it? Today...LOL:
Nvidia's answer to AMD's driver no doubt ;)
GeForce GTX 680:

Up to 26% in Call of Duty: Black Ops 2
Up to 16% in Battlefield 3
Up to 18% in Assassin's Creed III
Up to 9% in The Elder Scrolls V: Skyrim
Up to 6% in Medal of Honor: Warfighter
Up to 6% in StarCraft II
Up to 6% in Dragon Age II
Up to 6% in Batman: Arkham City
Up to 5% in S.T.A.L.K.E.R.: Call of Pripyat

GeForce GTX 660:

Up to 24% in Call of Duty: Black Ops 2
Up to 10% in Battlefield 3
Up to 7% in The Elder Scrolls V: Skyrim
Up to 5% in Dragon Age II
Up to 5% in Assassin's Creed III
Up to 4% in Batman: Arkham City
Up to 4% in Medal of Honor: Warfighter

Who buys a reference clocked card on purpose such as the ones used in your link? Does the driver fix the noise and heat that comes with these radeons vs. NV cards? Nope. Does the driver magically give you Cuda or Physx? Nope. Will any driver EVER fix heat noise or ever give you cuda or physx? NOPE. Will the driver magically fix their profits? Nope. NV's driver will be benchmarked in a few weeks after beta and it will be the same story again. Adding more free games just takes more away from profits. This is essentially yet ANOTHER price cut killing their bottom line. It's like taking $30 off their top cards (i figure they're paying around $10 each). STOP NOW AMD. YOU'RE GOING BANKRUPT. You simply can not win a price war with a company that has more money in cash than your entire company is worth. You will LOSE. Never mind the fact you have 2.05B in debt and they have ZERO. Quit GIVING away your cards and start charging MORE or say hello to your Q4 xmas loss. How dumb are you people at amd? And for those cheering the free crap/price cuts constantly it all comes with a price tag. NO COMPETITION IN 2YRS. Which means $500 cards that currently cost $100-200. We don't need AMD going bankrupt. But they seem driven to go there as fast as Obama wants to drive us off the fiscal cliff. Cheer for the free stuff all you want, but realize once it runs out and AMD is gone (like welfare we can't afford) you'll all be paying a far higher price for the next video card.

47million on food stamps and welfare for 20mil illegals=America bankrupt shortly.
3 AAA games free and a half dozen price cuts this year=AMD bankrupt shortly.
Oh and 20% off warfighter...So basically another $10 cut from AMD's top cards.

Retards. You'll all regret voting for a fool handing out welfare to 50% of the country (+20mil illegals free medical/food stamps about to come online), just as you'll all regret AMD giving away more of their NON-Existent profits. AMD is printing money they don't have, just like Obama.

You can't run a country like that, and you can't run a business like that either. IN both cases idiots were hired to run the show (a community organizer who broke Chicago has no idea how to create jobs, he's never run a business - Rory read doesn't design chips or any other product - same story). And in both cases, it won't be long before the SHOW is over.

"And boy have we patented it!" -- Steve Jobs, Macworld 2007

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