http://channel.hexus.net/content/item.php?item=16852
I'm sure the other tech players will be similar.
I'm sure the other tech players will be similar.
"nVidia issues dramatic revenue warning"
- Thread starter thilanliyan
- Start date
When people are struggling to make mortgage payments, or think they are getting a pink slip....it is hard to justify anything over $100 for a GPU, CPU, or any other luxury.
Yet they thought $450-$650 would be a good price for their new GPU's. I'm sure demand is down all over the industry, and for the first time in a while they are facing pretty stiff competition.
Intel (and IBM) had been warning investors of the overall slowdown in tech landscape. I'm surprised that it took this long to trickle down to Nvidia.
In case nobody notice, we could be in a recession that is 2nd only the the Great Depression. I expect more than a handful of tech companies to go tits up in 2009
In case nobody notice, we could be in a recession that is 2nd only the the Great Depression. I expect more than a handful of tech companies to go tits up in 2009
Not surprising at all really with all of the real estate, financial, auto and tech industry problems. Tech companies have been warning of declines and have been constantly adjusting their outlooks. 15-20% layoffs across industries have been common the last few months and I don't expect it to end anytime soon.
krnmastersgt
Platinum Member
- Jan 10, 2008
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In any recession, the top end of most markets aren't affected since the people that buy at that level aren't hit as hard as the rest of the economy. In this case, the enthusiast class cards are usually affected very minutely, it's the midrange that takes a large hit in their revenue stream. In any case, they already designed it, manufactured it, are starting to ship it, and yet you expect them to slash their prices because of the current economic state? That'd be some pretty bad business.
What makes you think this recession is so bad?
Also it didn't trickle down as you would put it, they just reported their earnings after Intel, it was obvious all the tech companies would be hit.By the retailers, not the manufacturers. So for example: Newegg, I doubt any retailer would actually do this, slashes the prices down and stops ordering anymore inventory of the product in question.
And? Even if that were true what do you care?
The truth is depending on the buying agreement from the distributor a retailer may be compensated for lower than expected sales. As well all Nvidia does is sell GPU's. The OEM's slap that gpu onto a card. Nvidia gives an MSRP and it is upto the OEM's to determine how to make that.
The bottom line is we have seen lower than MSRP for GPU's for years once the initial rush is done. This tells us somewhere along the line the cost is reduced. I say it starts with a retailer complaining to a distributor who then complains to the OEM. Then the money flows back down stream once the OEM lowers its prices.
krnmastersgt
Platinum Member
- Jan 10, 2008
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It is indeed a chain of demand that lowers the price over time along with the fact that the item in question has become dated tech, so an item dropping a large amount just weeks to a few months after its launch isn't a sound business plan.
In many of the cases where you buy for below MSRP, it's because of a special offer or rebate, in the case of rebates, they expect the majority not to be filed and therefore they just got away with selling items for a higher price up front than other models/companies.
And it was because it's performance didn't justify that high of a price. But the thing of it is this, that in a few other threads (especially the one regarding who can deal with a price war better/who has better margins on their card) the Nvidia guys all want to claim that it costs the same to build a GTX280 as it does a 4870 since DDR5 costs more, they assume Nvidia gets some kind of volume discounts, and they assume that 65nm that is being phased out for the current 55nm and upcoming 45/40nm tech is cheaper. Yet Nvidia wanted to price their cards at $450-$650 and AMD planned prices around $300.
The tech industry is just going through the same stuff as pretty much any other sector of the economy now. Nvidia certainly won't be alone here.
I know these cards weren't designed and priced overnight. But for whatever reason they were designed the way they were and with a price in mind. I think AMD's lower priced 'performance' segment card is better suited to make them money then Nvidia's startegy in this economy.
With all of that being said, I think we'd all be shocked if AMD somehow managed to make money this quarter... or maybe ever again.
Last i checked, nvidia doesn't make squat(nor does ati). They put TSMC to make the gpu chip and foxconn or some other manufacturer to assemble the whole thing which they then sell to their partners as "reference designs". And after some time they'll let their partners make their own boards, the "non-reference designs"
Ok, this is getting way out of the scope of the Video forum. Keep P&N out of here.
I've removed one post that had no business being in this forum.
- AmberClad (Video Moderator)
I've removed one post that had no business being in this forum.
- AmberClad (Video Moderator)
ViRGE
Elite Member, Moderator Emeritus
- Oct 9, 1999
- 31,516
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Holy freaking cow.:Q
It's obvious that everyone was going to start seeing significantly less revenue in Q4 - Intel having basically been the barometer for this - but I don't know anyone until now that is talking about 50%, previous warnings had been 20% at the most. This would put NVIDIA at somewhere around 450mil in revenue for the quarter, compared to 1.2bil at this time last year. They have no debt and over a billion in the bank, but they're not nearly rich enough to avoid needing to make some big cuts before the wallet runs dry. I'm not even sure where you begin to make those kinds of cuts; 450mil can't be too far off from their fixed costs. A 50% dip in revenue is generally a catastrophic thing that no one is well prepared for.
To have people buy half as much stuff Q4 compared to Q3, that's just unreal.:Q (and yet their stock was slightly up, go figure)
It's obvious that everyone was going to start seeing significantly less revenue in Q4 - Intel having basically been the barometer for this - but I don't know anyone until now that is talking about 50%, previous warnings had been 20% at the most. This would put NVIDIA at somewhere around 450mil in revenue for the quarter, compared to 1.2bil at this time last year. They have no debt and over a billion in the bank, but they're not nearly rich enough to avoid needing to make some big cuts before the wallet runs dry. I'm not even sure where you begin to make those kinds of cuts; 450mil can't be too far off from their fixed costs. A 50% dip in revenue is generally a catastrophic thing that no one is well prepared for.
To have people buy half as much stuff Q4 compared to Q3, that's just unreal.:Q (and yet their stock was slightly up, go figure)
Hectic stuff and agree fully. With the current economic positions i really dont see how it can recover properly even, and with the recession STILL looming its gonna be terrible once it hits, esp with the entheusiasts, bcoz they usually spend most of their paycheck towards their pc etc, so now when there is no paycheck, there is no buying anything else, meaning that same customer has basically been lost due to the econoy (until he finds another job). So either way we are in trouble and need to assess the siuation very carefully and remind ourself how delicate it actually is, and not only for USA, but everyone.
What's strange about this recession is I don't know anyone who is out of work or has lost their job.
For that matter, everyone I know (self included) is doing better than ever.
I think the problem is hysteria over a couple points increase of unemployment, housing crash, and tightened credit have made people with money stop spending it.
NVIDIA is dealing with lowers sales due to better competition, and decreased margins due to ATi's market "buy back" strategy.
I've said it before: You won't see the same R&D, release schedule, or dev relations of the past 5 years in a race for $200-$300. video cards. No such thing as a free lunch and todays "This is how prices always should have been! Yaaayy! I can buy a good video card for what crappy ones cost last year!" is tomorrow's "Why don't they release many new video cards anymore??" and "Why are these "new" video cards so much like the "old" ones?".
Yeah, but it's not like they're competing in many markets. I mean seriously, it's AMD here. Do they even have any money left? All NVIDIA needs to do is put out another decent series of cards at a decent price. My sympathy still lies with AMD on this one. NVIDIA is much better off compared to AMD.
whats even more strange is that in my country the dollar and euro haven't been this high in about 4 years now. Everything IT is more expensive than it was this summer, my e2180 went up almost $20, my antec 900 went up $60 and these are with the current exchange rates. How come you guys mess up the economy and i'm the one paying for it?
I've owned my Geforce 8800GTS 512MB for over a year now. It is the longest I have ever owned a card. The economy is pretty bad. Short on cash right now.
SolMiester
Diamond Member
- Dec 19, 2004
- 5,330
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Interestingly enough, here in NZ, we have tax cut and the interest rates have dropped 2% so far, so their is more people around with more money in their pockets?
SolMiester
Diamond Member
- Dec 19, 2004
- 5,330
- 17
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I have been expecting troubles for nvidia, ever since jensen went on those weird anti intel tirades - but certainly not this.
Not quite sure how the media made all those banks lend money to people with no way of paying them back.
Not quite sure how the media made all those banks lend money to people with no way of paying them back.
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