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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RE: half-empty vs cup half-full
By JonnyDough on 11/10/2012 2:54:46 PM , Rating: 2
That's from mid August, which means the data is likely from late September/early August. At least use relevant information if you are going to attempt to be a good fanboy.

RE: half-empty vs cup half-full
By spaced_ on 11/12/2012 2:43:35 AM , Rating: 2
I suppose in August/September everyone was buying AMD GPUs based on today's relevant data.

Perhaps current performance indicators indicate it's better to be an AMD fanboy. Perhaps tomorrow's will indicate it's better to be an Nvidia one.

Perhaps business and market trends work a little differently to the latest desktop GPU to GPU comparison on the latest review site.

Perhaps I'm making a statement, or perhaps I'm questions, or perhaps I'm doing neither.

RE: half-empty vs cup half-full
By spaced_ on 11/12/2012 2:44:46 AM , Rating: 2
*posing questions

RE: half-empty vs cup half-full
By TheJian on 11/12/2012 10:03:40 AM , Rating: 2
By all counts AMD is getting their clock cleaned.

Data from mid august can't actually come from Sept can it?...LOL. Sorry, couldn't resist. You're make this too easy.

Assuming I get your point and take it...Got any data to show AMD is winning the war? The 157mil loss for AMD? Is that good? The 203mil profit for NV? Is that bad? 64% chance by financial models say AMD will be out of business by in the next 2years. NV's chances = 1%. Which would you bet on?

Mobile grudge match, shows NV wins 13 games, and AMD wins 3 (and 2 of those 3 suck in the ratings, hence NV ignored optimizing for them). NV 116% faster in Diablo3. Yeah that's bad news. But only for AMD.
Dec 2012. 4x more apps optimized for it. Bad for AMD.
Project Denver/Boulder moving into AMD/Intel's space finally. Umm, bad for AMD cpu's. Many others also moving here. Bad for both Intel & AMD all around.
NVDA kicked AMD's A$$. Oct 15th too old for you too? Relevant data correct?
65% share of the market in gpu cards for NV. Last time I checked that means anyone else is sucking. I don't care who's side you "LIKE", if I'm buying a stock and have half a brain in my head I run FROM AMD and run TO NVDA.

The only really relevant data I need is roadmaps and balance sheets. CEO statements in the financial call's say a lot too. AMD's sucked. NV was cheering. I love AMD but wouldn't touch their stock with YOUR 10' pole, let alone my own :)

Please, by all means. If you have something in DATA that says otherwise point to it, because I can't see it anywhere I look. All I see is absolute and unequivocal failure for AMD. 30% layoffs in ~2yrs also.
2 more execs jumped ship:
The list of people who've left of been laid off is IMMENSE. It took ages for them to find anyone who'd take the ceo job. Rory Read isn't a top choice. One wonders what they had to offer to get him even...They should have picked another Dirk Meyer, or Jerry Sanders. Those two created great chip tech and some actual profits. They need an engineer running things. A guy from IS should be UNDER the Engineer running the company.

Andy grove, Craig Barret, Dirk Meyer, Jerry Sanders, Robert Noyce, Gordon Moore! All Chemistry, Engineer, Science, Physics. These people create products. Others just sell them. You can't win without the former. The latter don't create squat. Laying off tons of engineers doesn't help the cause either. Rory should have let go of management, and kept engineers at all costs. Good luck hiring new engineers when most feel you're on your way to bankruptcy. That's not really called a stable job in a scary economy. With obama and co driving us into the ground faster each year, you need to take a job at a company that has a GREAT FREAKING balance sheet or worry about your job getting cut every week.

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