WSJ: Nvidia Warns of Sales Shortfall

[Meghan54]

From today's WSJ.

http://online.wsj.com/article/SB100...395790124740502.html?mod=WSJ_Tech_LEFTTopNews (Subscription required.)

By FRANCESCA FREEMAN

Nvidia Corp. lowered Wednesday its second-quarter revenue estimates, amid weak consumer spending that weighed on sales of its flagship graphics processing chips.

The Santa Clara, Calif., company, which specializes in chips that help computers render moving images more effectively, said revenue for the quarter ending Aug. 1 would drop to $800 million to $820 million from the previous forecast of $950 million to $970 million range.

Nvidia blamed its lowered expectations on increases in the cost of memory, a vital component of their products, and economic weakness in the European and Chinese markets. Some customers were moving to lower cost graphics chips, which eats into the company's revenue, or buying computers with less expensive products from competitors.

 

[DaveSimmons]

They'll never admit it, but I'd blame it on the 470 and 480 not competing well enough.

Next quarter should be much better now that the 460 is out and performing so well in its price ranges.

 

[OCGuy]

Weak consumer spending will hurt AMD and nV, and help Intel (integrated).

Reminds me of Q1 2009.

 

[OCGuy]

They'll never admit it, but I'd blame it on the 470 and 480 not competing well enough.

Next quarter should be much better now that the 460 is out and performing so well in its price ranges.

You do realize the % of marketshare that top cards account for, right?

 

[DaveSimmons]

You do realize the % of marketshare that top cards account for, right?

Yes but the article seems to imply the poor high end cards did hurt:

Some customers were moving to lower cost graphics chips, which eats into the company's revenue, or buying computers with less expensive products from competitors.

ATI had the best cards under $200 until the 460, not to mention the cards above $200 that didn't double as blast furnaces, so nv was losing in both areas.

 

[Meghan54]

Another article on same subject, this time from eeTimes, no sub needed to read it.

http://www.eetimes.com/electronics-news/4205018/Nvidia-warns-of-revenue-shortfall



Interesting quote at end of article:

Shares of Nvidia slipped 3 percent in trading Wednesday to close at $10.13. The stock plunged further in after hours trading following the revenue warning, trading below $9.50 late Wednesday.

 

[Kenmitch]

Wonder if Apple's kick to the curb had any bearing on this? Or is this just the start of a downward spiral for Nvidia?

 

[darkswordsman17]

increases in the cost of memory

Is this pertaining to the RAMBUS licensing I wonder?

 

[Phynaz]

Is this pertaining to the RAMBUS licensing I wonder?

The RAMBUS licensing is for the GPU, and would cost 40 cents per chip. It will not occur for a very long time while it winds it way through the courts.

 

[Will Robinson]

Wonder if Apple's kick to the curb had any bearing on this? Or is this just the start of a downward spiral for Nvidia?

It's not the start...
The Wall Street Journal announced the top 10 worst stocks of 2010. nVidia was awarded top one in the list, with a stock fall of 45.4%.

Nvidia Corp. -45.4%
Dean Foods Co. -44.2%
AK Steel Holding Corp. -44.2%
Monsanto Co. -43.5%
Anadarko Petroleum Corp. -42.2%
King Pharmaceuticals Inc. -38.1%
Alcoa Inc. -37.6%
Office Depot Inc. -37.4%
Diamond Offshore Drilling -37.4%
Boston Scientific Co. -35.6%

 

[kyniskos]

The RAMBUS licensing is for the GPU, and would cost 40 cents per chip. It will not occur for a very long time while it winds it way through the courts.

Slight correction; it tops off at 40 cents a chip. It is 2% of the product price and capped at a product price of 20$. If the chip is sold for less then 20$, it will be less pr. chip. Haven't got a clue what price nVidia charges from their customers though. Getting a license and continueing to operate under it isn't a problem. The 60 day presidential review periode allows them to still sell products in the states during this periode. Effectively I suspect it functions as a deadline for nVidia to agree with Rambus regarding the payment for the years of infraction.
The real question is how big is this payment going to be. I'll bet nVidia will use the licensing agreement as a basis, because it contains a cap, thereby capping any payment from nVidia. Don't know if the US courts will feel bound by it though. It would be common sense, but I have long since given up on that in the american justice system, especially when regarding patent laws.

 

[Genx87]

It's not the start...
The Wall Street Journal announced the top 10 worst stocks of 2010. nVidia was awarded top one in the list, with a stock fall of 45.4%.

Nvidia Corp. -45.4%
Dean Foods Co. -44.2%
AK Steel Holding Corp. -44.2%
Monsanto Co. -43.5%
Anadarko Petroleum Corp. -42.2%
King Pharmaceuticals Inc. -38.1%
Alcoa Inc. -37.6%
Office Depot Inc. -37.4%
Diamond Offshore Drilling -37.4%
Boston Scientific Co. -35.6%

Sounds like a good time to buy.

 

[Lonyo]

Sounds like a good time to buy.

Only if you assume they have a good future going forwards, which depends on real adoption of Tesla and Tegra more than anything else.
As with all stocks, purchasing is a gamble, but you have to consider that they will only slip in the PC and laptop segment, and have to make it up by growing their business elsewhere, one in a market they need to develop, and the other in a market where there are already many established players.

 

[evolucion8]

Its quite strange that so many bad stuff is happening to nVidia, the mac thing, the fermi problem at first, lost market share, the Rambus crap, less profits, bad sales of some of their SKU, drop in value of their shares, all those things had make JHH stay quiet for a long time, is he still feeling the effects of the Can of Whoop Ass?

I think that JHH arrogance and cocky attitude is driving down nVidia, he should step down and let fresh blood to drive the company, I hope he doesn't transform to an Hector Ruiz, he's following his steps!!

 

[MrK6]

Sounds like a good time to buy.

Wow, I hope that was sarcasm.

 

[Genx87]

Only if you assume they have a good future going forwards, which depends on real adoption of Tesla and Tegra more than anything else.
As with all stocks, purchasing is a gamble, but you have to consider that they will only slip in the PC and laptop segment, and have to make it up by growing their business elsewhere, one in a market they need to develop, and the other in a market where there are already many established players.

I am looking at it as the GF104 is here and subsequent products based on that core should only improve Nvidia's position from where it has been for the past 2 quarters. Tesla and Tegra are longer term products.

 

[Genx87]

Wow, I hope that was sarcasm.

A stock off 50% from its high? When do you typically buy stocks?

 

[tviceman]

Nvidia absolutely must out with an x86 APU within the next two years to stay viable in the consumer PC market or face being bought out by Intel - the latter of which may not be an attractive alternative.

 

[Idontcare]

A stock off 50% from its high? When do you typically buy stocks?

value trap

 

[MrK6]

A stock off 50% from its high? When do you typically buy stocks?

God I hope you don't actually give people financial advice, because no, that is not when you buy stocks.

EDIT: Idontcare beat me to it :awe:.

 

[v8envy]

A stock off 50% from its high? When do you typically buy stocks?

When I notice clear reversal patterns and a sustained upward trend. Conversely, I have no problems "selling" if a stock is 50% off and showing no signs of improvement.

 

[lowrider69]

Nvidia isn't going anywhere. This type of stuff has been going on since I can remember with both ATI and Nvidia, one company has a bad period the other doesn't and it goes on and on. Whenever one of the two has a bad period the fans of the other company swoop in to dump on them.."this time is different...the end is near". I've seen the same pattern play out for the last 10+ years. When Nvidia released the 5800 way back people thought they were done. People were writing off ATI several years back when they merged with AMD, they're still here. There's several other examples but you get the drift.

 

[Wreckage]

Nvidia isn't going anywhere. This type of stuff has been going on since I can remember with both ATI and Nvidia, one company has a bad period the other doesn't and it goes on and on. Whenever one of the two has a bad period the fans of the other company swoop in to dump on them.."this time is different...the end is near". I've seen the same pattern play out for the last 10+ years. When Nvidia released the 5800 way back people thought they were done. People were writing off ATI several years back when they merged with AMD, they're still here. There's several other examples but you get the drift.

Yep last year AMD was on a top ten list of companies headed for bankruptcy.
http://finance.yahoo.com/tech-ticke...ard-Bankruptcy?tickers=AMD,LVS,S,M,GT,MYL,HTZ

Other than Apple and Intel a lot of tech companies are getting hit pretty hard. AMD posted another loss this quarter and their outlook was not rosy for the next quarter. It will be important to see what these companies (and the whole economy) does in the 4th quarter.

 

[Creig]

Sounds like a good time to buy.

Not really. Not with the ongoing RAMBUS lawsuit and Apple switching to ATi. I think it'll continue to slide a couple more dollars before it bottoms out.

 

[WelshBloke]

Yep last year AMD was on a top ten list of companies headed for bankruptcy.
http://finance.yahoo.com/tech-ticke...ard-Bankruptcy?tickers=AMD,LVS,S,M,GT,MYL,HTZ

Other than Apple and Intel a lot of tech companies are getting hit pretty hard. AMD posted another loss this quarter and their outlook was not rosy for the next quarter. It will be important to see what these companies (and the whole economy) does in the 4th quarter.

*timescale deliberately chosen to annoy Wreckage*