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 TheJian on 11/12/2012 9:05:20 AM , Rating: 2
Only at home, not in the pro market. Nvidia RIGHTLY aimed their home cards at GAMES. Because guess what? We play games more than we fold at home...LOL. We play games more than we try to get bitcoins...LOL. I don't pay $300 for a card to do anything other than play games. Easily had bitcoin party is over, and who the heck runs their gpu's at 100% in todays economy to solve cancer for someone else? :) Run up my electric bill so you can make a billion on your next drug you try to sell me? SCREW YOU company X. :)

Having said that, I'm seriously happy Nvidia decided Diablo3 should run 116% faster than Radeon's instead of being great at solving cancer on my home PC :) Well DUH.

For real work - K5000+Tesla until a Quadro110 comes out. There's a reason the combo will set you back $5K. :)

These are not radeons ;) When you're running a $1500-20K software on your system in the hopes of making millions I don't expect it to run on my puny $300 home card as if it was a $3300 K20 coming next month. They're not designed for the same things.

But if it makes your fanboy side feel better, you just keep saying radeon is faster folding@home...LOL. I've never even installed it, and most gamers don't even know what it is. Ask 10 people on the street what a bitcoin is...ROFL. Heck when fox news asked a bunch of people on the street if obama won the debate (BEFORE it actually happened) most said "obama won..."...ROFL. Followed by why did you think he won last night? "umm, he just had the better ideas, and I like what he had to say"...ROFL...Really? Then they asked, so did you watch the whole thing? "Oh yeah, obama did great"...ROFL. I wish they would have told them it wasn't going to happen until the NEXT DAY to see the look on their faces. People don't even know what's going on today. A week later they asked they asked something like "what do you think of obama picking romney as his running mate"..."It was a great idea, it really shows he bipartisan". Just watch some watters world for some great laughs. People didn't even know who was in the race.

I'd guess if Watters went out on the street and asked people what they thought of the new "gpgpu technology and do you think it will really help us go green and get better gas mileage without OIL?", they'd most likely say "oh yeah those new gpgpu's are great green tech, and will really help us get off oil"...ROFL. 95% of america has no idea what gpgpu even is let alone that AMD has a good home card for it ;) Their 157mil loss and market share loss to Nvidia says "it's the games stupid!". Just like the economy :) Xmas won't be good too AMD, but winning 13/16 games like NV did in the mobile grudge match gets into everyone's memory article after article. That sells HOME CARDS. People think if you have the crown, all your cards must win. It's pretty clear NV has the crown. The 65% market share vs. AMD's share says it all. The $225mil AMD owes GF for Dec31st won't help the quarter for AMD at all either. I expect a 300-400million loss for AMD for xmas Q, and this is supposed to be the BEST quarter for all gizmo/gadget makers. On the other hand I expect NV to have 100-200mil profit. That's a HUGE difference there guy.

AMD's cup is 7/8ths empy, while NV's is 3/4 full :),INTC,N...

AMD 64% chance of bankruptcy in the next 2yrs. It was 51% before the Q loss last month. Note NV is 1% chance (and only 1% because they assign NOTHING 0%). The numbers don't lie. You need to start reading balance sheets along with your benchmarks ;) Just a thought.

I've predicted it on here/elsewhere many times in the last year, amd bankrupt by xmas 2014 or bought. If they wait too long it will only be patents being bought rather than their pipeline (stop cutting prices AMD! You might actually make money then). Even intel went from 1% a few months ago to 5% chance now that everyone is entering the server/desktop market (server 1st, though, NV has Denver for desktop probably earlier than most since it sampled in may on 20nm Samsung Austin TX plant). NV goes to world class fab at 20nm, while the rest fight over crap class TSMC/GF. I can't wait to see what a 20nm Kepler does to noise and heat :) Watch for that next xmas right after Denver hits. Denver is the testing ground for Nvidia's next step, which is Kepler (or some variant) on 20nm at samsung. Samsung will use the much larger Kepler to take up the slack for apple's millions of chips leaving their fabs no matter what Tegra does. All the kepler variants (home/pro) will take up a lot of wafers. At the same time Samsung will get a leg up on Apple's A7 as they try to get TSMC to actually get a chip right for once. Good luck apple/amd/qualcomm ;) TSMC sucks.

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