WSJ: Nvidia Warns of Sales Shortfall

[thedosbox]

We discussed nvidia's situation in more depth here. GF104 is only going to slow the rate of deterioration. They need to find a replacement for the lost chipset business, and get the other parts of their business growing faster.

 

[akugami]

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.

I disagree. They can stay in the high end discrete GPU market and still make decent money. They are still the top GPU company in the world. AMD being a close second. That means so long as there isn't another Fermi within the next year, they'll still be a viable business. Obviously they still lose out on the low to mid range since those will be completely taken over by Intel and AMD via integrated CPU+GPU on the same die.

The major reason why they don't need to put out an x86 processor is because of the number of devices using ARM CPU's. Android phones and iPhones all use ARM I believe. There are tablets coming out utilizing ARM CPU's. There is a growing viable alternative to x86 processors in the ARM CPU. nVidia is taking part with their Tegra line of chips that integrate an ARM CPU with nVidia's graphics technologies.

 

[RobertR1]

Sounds like a good time to buy.

Load up on Nvidia and Blockbuster. You'll be a millionaire in no time.

 

[Will Robinson]

Lolz@ people who buy stocks on the way down.

 

[maddie]

I disagree. They can stay in the high end discrete GPU market and still make decent money. They are still the top GPU company in the world. AMD being a close second. That means so long as there isn't another Fermi within the next year, they'll still be a viable business. Obviously they still lose out on the low to mid range since those will be completely taken over by Intel and AMD via integrated CPU+GPU on the same die.

The major reason why they don't need to put out an x86 processor is because of the number of devices using ARM CPU's. Android phones and iPhones all use ARM I believe. There are tablets coming out utilizing ARM CPU's. There is a growing viable alternative to x86 processors in the ARM CPU. nVidia is taking part with their Tegra line of chips that integrate an ARM CPU with nVidia's graphics technologies.

I thought the consensus was that you needed high volume parts to spread overhead costs.

 

[SilverTrine]

I dont see how Nvidia can pull out of this death spiral personally. Apple just dumped them which means the guidance for Nvidia's future desktop/laptop parts is bad. If Apple expected Nvidia to be ahead in a year or so they would have been more diplomatic. They just got bent over by Rambus which could cost them a fortune.
They've burnt a lot of bridges by how they handled the failures of some of the lines of their GPU's. They burnt bridges with Microsoft of all people, I'm sure that had nothing to do with why it took them forever to get a Dx11 part.

All this in the middle of a recession when their biggest competitor is stealing a bigger part of a pie that is shrinking.

Maybe they have another trick up their sleeve but the CEO dumping stock like the boat was sinking isnt exactly comforting.

 

[ZimZum]

Load up on Nvidia and Blockbuster. You'll be a millionaire in no time.

Pretty sure with around $180 bucks you can buy enough blockbuster stock to gain a controlling interest of the company.

 

[JSt0rm]

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?

Its all because they messed with viral marketing the anandtech forums :twisted:

 

[Will Robinson]

One thing's for sure....The lights will be burning late back at Headquarters tonight.
I wonder how much blame for this serious market share/stock price fall will be attributed to the anti NV backlash created by their own Focus group
members?
They should be the first to be purged.

ATi: "Our Germans are better then their Germans"

+1 If you know the movie quote^_^

 

[ronnn]

http://www.semiaccurate.com/2010/07/29/nvidias-mistakes-catch-bottom-line/

Put Charlie in a good mood. Lets hope he is more wrong than right.

 

[Meghan54]

Maybe they have another trick up their sleeve but the CEO dumping stock like the boat was sinking isnt exactly comforting.

I see this sort of comment time and again, making it quite obvious that the poster of such a comment has NO clue as to how an officer of a company can sell stock.

Just an FYI, SilverTrine, when a CEO or other officer wants to sell stock, that person has to file many months ahead with the SEC his/her intention to sell said stock. It's never done as "normal" stock holders can.....buy or sell at a whim.

And what's even more showing of ignorance is the fact that stock options are how nvidia is paying its CEO and other officers the majority of their compensation like a lot of firms, so if they want any $$, they have to sell some of the stock they've been paid with. And the stock sales are timed months ahead of when they're done.

And if one would look at other companies that compensate their execs. with stock options, one would see similar patterns.

Of course, the final nail in the ignorance coffin of Trine's posting is he fails to consider the volume of stock being sold vs. the amount being held. In the case mentioned, the stock amount being sold is around 1%, not exactly dumping stock.

 

[Meghan54]

I wonder how much blame for this serious market share/stock price fall will be attributed to the anti NV backlash created by their own Focus group
members?

From the Wall Street perspective, the focus groups are nonexistent, and they're not punishing the stock price for them in any fashion or way.

They're punishing nvidia's stock price due to losing market share, sales, and lack of confidence in the future outlook of the company.....at least over the next few quarters.

 

[heyheybooboo]

We discussed nvidia's situation in more depth here. GF104 is only going to slow the rate of deterioration. They need to find a replacement for the lost chipset business, and get the other parts of their business growing faster.

I'm thinking this has a lot to do with it, too.

For years it was their fastest growing segment (seemingly doubling from previous reporting periods every time I checked). I was really surprised at the levels it was reaching as a percentage of their income.

I'm too lazy to see what it is now but I suspect it has dropped considerably over the last few years.

Hope you didn't buy Gen --- $9.13 Day Change -9.87%




--

 

[ramj70]

In 2002 their stocked started at 23 and dropped down to 3 in less than a year. Then for the next four years their stock slowly climbed up to 37 and then started dropping in 2008 down to about six and then climbed to 18.5 in 2009 and then is dropping again. They have had three stock splits during that time

http://www.google.com/finance?q=NVIDIA

 

[pyr02k1]

ATi: "Our Germans are better then their Germans"

+1 If you know the movie quote

The Right Stuff. I remember watching it in the early 90s when I was a kid. Not sure why I was watching it though, or how I remember it. Probably wanted to be an astronaut around then

 

[Phynaz]

I see this sort of comment time and again, making it quite obvious that the poster of such a comment has NO clue as to how an officer of a company can sell stock.

Just an FYI, SilverTrine, when a CEO or other officer wants to sell stock, that person has to file many months ahead with the SEC his/her intention to sell said stock. It's never done as "normal" stock holders can.....buy or sell at a whim.

Your comment shows you have NO clue how the officer of a company actually sells stock.

There is a person in the company that submits (electronically) the planned sale documentation every two weeks for every officer in the company. Therefore ANY sale of stock they make is a planned sale.

 

[Dribble]

I suspect this is mostly down to the lost chipset market not being replaced by new markets fast enough. If you think 1/3 of their business used to be chipsets then it's no surprise they are finding it tough. However I think they had great hopes for the take off of telsa and tegra, both of which are growing much slower then nvidia would have liked. Particularly tegra has been disappointing, partly their own fault for concentrating too hard on keeping microsoft happy, who then failed to produce any decent products with the hardware, when they should have focused 100% on android.

That said I don't suppose the slower sales of geforce cards helped.

It's not the end of the world however. In the short term nvidia just released the fermi quadro cards which will make them a fortune, the new geforce cards should claw back a bit of the consumer market, and optimus's many design wins should turn into masses of sales.

In the slightly longer term tegra and telsa still have great potential, and it's likely in the end nvidia will win something from Intel for the loss of the chipset market.

 

[Lonyo]

I'm thinking this has a lot to do with it, too.

For years it was their fastest growing segment (seemingly doubling from previous reporting periods every time I checked). I was really surprised at the levels it was reaching as a percentage of their income.

I'm too lazy to see what it is now but I suspect it has dropped considerably over the last few years.

It dropped enough that sometime recently (can't remember exactly when) they stopped reporting it and folded the MCP/etc business into the GPU business for the revenue listing on their financial reports.
Now IIRC it's GPU (discrete desktop/mobile + chipsets), Professional (Tesla and Quadro I think) and mobile (Tegra).
Basically they hid how much it's dropped by stopping reporting it.

 

[Aaluran]

snip
...and optimus's many design wins should turn into masses of sales.
snip

Now there's a point I wholeheartedly second. Because I'm looking for a notebook to be a second computer and, frankly, anything besides Optimus won't do for me - it will either be too slow, would die within (metaphorical) seconds of being unplugged from the wall (seriously - 2.5 hours?), or have to be restarted two hundred times per day for old-style switchable graphics. And the GF 104/106/108 will be decent if not very good if the 460 is any indication. Actually, if it were in the price range I was looking for, I'd get a GTX 460 for my desktop. And all this coming from a guy who doesn't like nVidia at all.

 

[akugami]

I'm actually looking to replace my primary laptop. It's a gaming laptop. Crap battery life, decently powerful (when I bought it). Problem is I find I hate gaming on my laptop. Compound the problem with a decided lack of playing time and you got a nice heavy laptop that is used primarily for office type apps and web browsing.

Next laptop is definitely going to be one with nVidia Optimus for long battery life and some light gaming if I feel like it. Long battery life being the most important thing.

I thought the consensus was that you needed high volume parts to spread overhead costs.

Not necessarily. There are a few niche GPU players who are still in business even if they've been out of the limelight for years. There's enough brains in nVidia's buildings that they can survive on just the mid and high end discrete as well as the pro line of graphics cards.

 

[JSt0rm]

I see this sort of comment time and again, making it quite obvious that the poster of such a comment has NO clue as to how an officer of a company can sell stock.

Just an FYI, SilverTrine, when a CEO or other officer wants to sell stock, that person has to file many months ahead with the SEC his/her intention to sell said stock. It's never done as "normal" stock holders can.....buy or sell at a whim.

And what's even more showing of ignorance is the fact that stock options are how nvidia is paying its CEO and other officers the majority of their compensation like a lot of firms, so if they want any $$, they have to sell some of the stock they've been paid with. And the stock sales are timed months ahead of when they're done.

And if one would look at other companies that compensate their execs. with stock options, one would see similar patterns.

Of course, the final nail in the ignorance coffin of Trine's posting is he fails to consider the volume of stock being sold vs. the amount being held. In the case mentioned, the stock amount being sold is around 1%, not exactly dumping stock.

I'm sure you know what you are talking about but I'm sure dear leader knew months ago the shit was gonna hit the gpu fan.

 

[bryanW1995]

I dont see how Nvidia can pull out of this death spiral personally. Apple just dumped them which means the guidance for Nvidia's future desktop/laptop parts is bad. If Apple expected Nvidia to be ahead in a year or so they would have been more diplomatic. They just got bent over by Rambus which could cost them a fortune.
They've burnt a lot of bridges by how they handled the failures of some of the lines of their GPU's. They burnt bridges with Microsoft of all people, I'm sure that had nothing to do with why it took them forever to get a Dx11 part.

All this in the middle of a recession when their biggest competitor is stealing a bigger part of a pie that is shrinking.

Maybe they have another trick up their sleeve but the CEO dumping stock like the boat was sinking isnt exactly comforting.

um, do you mean an amd-like "death spiral", or a more garden variety one? a couple years ago amd was getting obliterated by nvidia and they still managed to pull through, fermi is just a speed bump for nvidia right now. if we look up 18 mos from now and amd has double the discrete market share of nvidia then I'll get worried.

 

[Lonyo]

um, do you mean an amd-like "death spiral", or a more garden variety one? a couple years ago amd was getting obliterated by nvidia and they still managed to pull through, fermi is just a speed bump for nvidia right now. if we look up 18 mos from now and amd has double the discrete market share of nvidia then I'll get worried.

ATI getting obliterated in the past and coming back has nothing to do with the future, since the graphics market is changing towards an integrated chip model where GPU and CPU are on the same die.
Now, that won't happen instantly, but it will further erode the low end market for NV, which presents some problems, however (IMO) it might not be that serious in the medium term.
Short term it won't be too bad (~2 years), medium term could be focusing on higher end parts that can be used for other applications as well (2~5 years) i.e. the Fermi/Tesla route, so the loss of the low end GPU market won't matter when they are designing for the high end/HPC market and pulling in cash from there, but 5+ years, when the HPC market might change through CPU+GPU coming together, the future might not look bright, or they could be fine by developing their chips nicely.
(IMO).

 

[thedosbox]

ATI getting obliterated in the past and coming back has nothing to do with the future, since the graphics market is changing towards an integrated chip model where GPU and CPU are on the same die.

Exactly. nvidia would become a niche player if they are relegated to the higher margin, smaller volume end of the market. While HPC offers fat margins, it isn't going to offer the same growth prospects as the chipset business once did (IMO).

 

[Wreckage]

um, do you mean an amd-like "death spiral", or a more garden variety one? a couple years ago amd was getting obliterated by nvidia and they still managed to pull through, fermi is just a speed bump for nvidia right now. if we look up 18 mos from now and amd has double the discrete market share of nvidia then I'll get worried.

This.

Although the worry is still Intel crushing them both into dust. CPU prices will go through the roof and you can kiss discrete graphics goodbye.