NVIDIA Reports Financial Results for Third Quarter Fiscal Year 2010

[btarunr]

NVIDIA Corp. today reported revenue of $903.2 million for the third quarter of fiscal 2010 ended Oct. 25, 2009, up 16 percent from the previous quarter and up slightly from $897.7 million reported in the same period a year earlier.

On a GAAP basis, the company recorded net income of $107.6 million, or $0.19 per diluted share, compared with net income of $61.7 million, or $0.11 per diluted share a year ago. Third quarter GAAP results included a benefit to operating income of $25.1 million related to insurance reimbursements received during the quarter. On a non-GAAP basis – excluding the insurance reimbursements and stock-based compensation, as well as their associated tax impact − net income was $110.3 million, or $0.19 per diluted share, compared with $111.4 million, or $0.20 per diluted share, a year earlier.



"We continued to make progress in the third quarter with healthy market demand across the board," said Jen-Hsun Huang, president and chief executive officer, NVIDIA. "Revenue was up from a year ago, with improvement in each of our PC, professional solutions and consumer businesses. It’s great to see us shipping orders with our Tegra mobile-computing solution, and growing enthusiasm for our Tesla platform for parallel computing in the server and cloud-computing markets."

Gross margin, on a GAAP basis, increased to 43.4 percent from 20.2 percent in the previous quarter and 41.0 percent a year earlier. On a non-GAAP basis, gross margin was 41.0 percent, up 4.7 points from the 36.3 percent reported in the previous quarter but slightly off from 41.9 percent a year earlier.

GAAP net loss for the nine months ended Oct. 25, 2009 was $199.1 million, or $0.36 per share, compared to a net income of $117.6 million, or $0.20 per diluted share for the nine months ended Oct. 26, 2008. Non-GAAP net income for the nine months ended Oct. 25, 2009, which excludes a $93.9 million net charge related to the weak die/packaging material set that was used in certain versions of our previous generation chips, a non-recurring charge of $140.2 million in connection with a cash tender offer to purchase employee stock options, stock-based compensation charges, and their associated tax impact, was $101.4 million, or $0.18 per diluted share, compared to a net income of $397.7 million, or $0.68 per diluted share for the nine months ended Oct. 26, 2008.

Outlook
The outlook for the fourth quarter of fiscal 2010 is as follows:

• Revenue is expected to be up slightly, approximately 2 percent, from the third quarter.
• GAAP gross margin is expected to be in the range of 40 to 42 percent.
• GAAP operating expenses are expected to be approximately $305 million.

Third Quarter Fiscal 2010 and Recent Highlights:

• First major Tegra devices shipped: Microsoft’s Zune HD and the Samsung M1.
• Held first ever GPU Technology Conference, which was 50% oversubscribed, with 1,500 attendees from 40 countries. More than 200 technical sessions were conducted, and presentations were made by 60 emerging companies that utilize the graphics processing unit (GPU).
• Introduced the next generation CUDA GPU architecture, codenamed "Fermi." The Fermi architecture is the foundation for the world’s first computational GPUs, delivering breakthroughs in both graphics and parallel computing.
• Oak Ridge National Laboratory announced plans to use Fermi to build a new supercomputer, which is designed to be the world’s fastest.
• Launched the industry’s first development environment for massively parallel computing. The tool, code-named "Nexus", is integrated into Microsoft Visual Studio, so that developers will be able to use Visual Studio and C++ to write applications that leverage Fermi GPUs.
• Launched NVIDIA RealityServer, a powerful combination of GPUs and software that streams interactive, photorealistic 3D applications to any web connected PC, laptop, netbook or smart phone.
• Adobe’s new Flash Player 10.1 will be accelerated by GeForce, NVIDIA ION and Tegra products, helping to bring uncompromised browsing of rich Web content to netbooks, smartphones and smartbooks.

Non-GAAP Measures

To supplement NVIDIA’s Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP net income, non-GAAP net income per share, free cash flow and days sales in inventory. In order for NVIDIA’s investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude a charge related to the weak die/packaging material set that was used in certain versions of NVIDIA’s previous generation chips, net of insurance reimbursements, a non-recurring charge related to a tender offer purchase, a non-recurring charge against cost of revenue related to a royalty dispute, a non-recurring restructuring charge against operating expenses, recurring stock-based compensation charges, and the associated tax impact of these items, where applicable. Free cash flow is calculated as GAAP net cash provided by operating activities less purchases of property and equipment and intangible assets. Days sales in inventory is computed using GAAP ending inventory multiply by the number of days in the period divided by the non-GAAP cost of revenue. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user's overall understanding of the company’s historical financial performance. The presentation of the company’s non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company’s financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

[LittleLizard]

i dont understand why it goes up when ati is kicking their butt in all market segment, they halted the development of nforce...

[Mistral]

Originally Posted by LittleLizard

i dont understand why it goes up when ati is kicking their butt in all market segment, they halted the development of nforce...

Tegra, ion, sli-licenses-for p55, god-knows-what?..

[Benetanegia]

Originally Posted by Mistral

Tegra, ion, sli-licenses-for p55, god-knows-what?..

Them selling more GT200 cards than ever before because of HD58xx shortage and prices...

That is true, don't think that I'm joking. It happened the same when Play Station 3 launched, XB360 sold more than ever. It's due to parents going to buy what their kids ask for, and because there is shortage and the price is more than what they thought it would be, they end up buying the second best thing they can find.

[wolf]

They do have plenty of products that don't immediately revolve around GT200 too, I bet Ion's are selling like hotcakes, this mite be a silly one, but are there Ion netbooks yet?

[Cheeseball]

Tegra, ION, SLi licensing, the consumer/budget video cards (9300M, 9500GT, etc.), and supercomputing are their current business- driving markets.

ATI is only kicking ass in the enthusiast segment (HD 57xx/58xx series) at the moment.

@wolf

Yes there are.

[Benetanegia]

Nvidia has just released a GPU accelerated ray-tracing renderer OptiX, which I guess is the evolution of Mental Ray or something like that and licensing for this from Autodesk, the car industry, etc. can generate some good profits too.

[wolf]

thank you kindly Cheesball, also a must for me is an Atom 330, having had a N270 and the 280 doesn't seem much better.

Also while ATi is indeed winning, and by a good margin, I personally wouldn't quite call it an ass kicking, but hey, that's just me.

[Benetanegia]

Originally Posted by wolf

thank you kindly Cheesball, also a must for me is an Atom 330, having had a N270 and the 280 doesn't seem much better.

Also while ATi is indeed winning, and by a good margin, I personally wouldn't quite call it an ass kicking, but hey, that's just me.

That's not what I've been told by my friends working in distributors and stores here. Demand is higher, there's no doubt of that, but more people end up leaving with a GT200 than with a HD5xxx card. There's very few HD5xxx cards out there and since HD5xxx cards have been released there's almost no HD4xxx cards, they are gone for good. This is just temporary, but IMO enough to make for a qurter's profit.

[wolf]

Interesting times indeed, and by no means are GT200 cards a slouch just because a 5870 is faster overall.

many of my friends love Nvidia because of great past experiences, to them I say grab a 260 for peanuts, they are still a beast of a card IMO.

[Munki]

Insane. Seriously? ATI makes the same card for cheaper, Nvidia charges an arm and leg. They sell one GTX 295 they have made profit for the year already. :lol:

[Mistral]

Originally Posted by Benetanegia

That's not what I've been told by my friends working in distributors and stores here. Demand is higher, there's no doubt of that, but more people end up leaving with a GT200 than with a HD5xxx card. There's very few HD5xxx cards out there and since HD5xxx cards have been released there's almost no HD4xxx cards, they are gone for good. This is just temporary, but IMO enough to make for a qurter's profit.

Are you bananas? There's way more HD4xxx stock floating around than GT2xx (re-badges excluded), and demand is hardly the main reason.

[PP Mguire]

I see more 260s than 4850/4870s these days. When 5000 launched most everybody dropped their 4 series cards only to be disappointed by no stock of 5000. I personally know quite a few people who jumped on 275s or 285s because of this.

[Easy Rhino]

i think i know why nvidia didnt rush to get out the new dx11 cards. they want to spread out their big earnings across quarters to get their stock price up. so they just had a 900 million dollar quarter and they will do something similiar for next quarter when they release the dx11 lineup.

[wolf]

Originally Posted by Easy Rhino

i think i know why nvidia didnt rush to get out the new dx11 cards. they want to spread out their big earnings across quarters to get their stock price up. so they just had a 900 million dollar quarter and they will do something similiar for next quarter when they release the dx11 lineup.

A very interesting take. has a lot of merit imo.

[Benetanegia]

Originally Posted by Mistral

Are you bananas? There's way more HD4xxx stock floating around than GT2xx (re-badges excluded), and demand is hardly the main reason.

Read below.

Originally Posted by PP Mguire

I see more 260s than 4850/4870s these days. When 5000 launched most everybody dropped their 4 series cards only to be disappointed by no stock of 5000. I personally know quite a few people who jumped on 275s or 285s because of this.

Exactly.

[newtekie1]

Originally Posted by LittleLizard

i dont understand why it goes up when ati is kicking their butt in all market segment, they halted the development of nforce...

Halting developement on a future due to legal issues has nothing to do with your bottom line, if anything it makes it better since the money isn't being spent on developement.

Any while ATi is doing better than they were before, I would hardly say they are kicking nVidia's butt. The GTX295 is still top dog, and due to the shortages on ATi products, nVidia's products are selling better. Really, nVidia hasn't lost a whole lot of market share.

You also have to remember that mid-range is where the majority of sales and profit come from. And ATi has only managed to get the HD5700 series out in the last couple of weeks, it truly hasn't had time to take a bite out of nVidia's GTS250 and 9800GT sales.

[Cheeseball]

And the fact that the HD 5750 and HD 5770 are still priced above $120.00. :P If ATI really wants to stick it to NVIDIA, then they would either release a HD 5600 series card or drop the prices on the HD 5700 series.

[sethk]

Nvidia makes a large percentage of their add-in card revenues from the professional segment (Quadro and Tegra) compared to desktop cards, even though volume of desktop cards is much higher.

[gaximodo]

At least 5870 is more expensive (600 AUD) than 2x 275's (540~580 AUD) here in Aus.

And 2x275 kick a single 5870's ass performance wise.

And pretty much no 5850 available anywhere.

Based on my luck with my 4870x2 and 1600. I will never go back to ATI if there is a NV alternative not more than 20% higher price.

[a_ump]

Originally Posted by newtekie1

You also have to remember that mid-range is where the majority of sales and profit come from. And ATi has only managed to get the HD5700 series out in the last couple of weeks, it truly hasn't had time to take a bite out of nVidia's GTS250 and 9800GT sales.

surely your wrong? I can't belive people would still be buying the 9800GT when the HD 4770 and HD 4850 both outperform it in the same price range, $99 for 9800GT - $104 for HD 4850. The GTS 250 does outperform the HD 4850 but its also prices $124+ and an HD 4870 can be had for that price which is ~15% better overall. I just can't imagine Nvidia is actually losing to ATI in the mainstream market, ATI definitely should be winning it since they have better performance at price points compared to nvidia's cards

[newtekie1]

Originally Posted by a_ump

surely your wrong? I can't belive people would still be buying the 9800GT when the HD 4770 and HD 4850 both outperform it in the same price range, $99 for 9800GT - $104 for HD 4850. The GTS 250 does outperform the HD 4850 but its also prices $124+ and an HD 4870 can be had for that price which is ~15% better overall. I just can't imagine Nvidia is actually losing to ATI in the mainstream market, ATI definitely should be winning it since they have better performance at price points compared to nvidia's cards

Well, the problem is that the 9800GT is $75. The HD4770 is $110. That is over a 45% price increase for what is essentially a less than 10% performance improvement...

The same pretty much goes for the HD4850, also available at $110, but the HD4850 at least offers slightly more than a 10% improvement.

Going to the GTS250, and you have a card that outperforms the HD4770 and HD4850, and can be had new for $100, $10 less than either card...

Now look at the HD5750, going for $145 right now. A 45% price increase over the GTS250 for a 4% performance increase. I hardly consider that worth it.

Moving onto the HD5770, and you have a card that sells for $170. Of course the GTX260 216SP outperforms it and goes for $145 new.

I really don't see where you are getting that ATi has better performance and price in this segment. The GTS250 is cheaper, and a better performer than the HD4000 counterparts right now, and the HD5750 definitely doesn't provide the performance improvement over the GTS250 to justify the price. Maybe you can shed some more light on where you are getting your figures from. I'm going off W1z last review relative performance and newegg's prices on new cards, I'm sure shopping around can yield better price on both side, I just don't have the time for this discussion. Maybe you can find some cards cheaper to justify your view?

Of course, like I've said before, another large issue is the supply problems that ATi has been having. While the HD5800 series is better than nVidia's higher end offering both in price and performance, they are nearly impossible to find. They go out of stock almost as fast as they come in. This allows nVidia to sell the much weaker GTX285 for $360.

[Atom_Anti]

Nvidia is a liar, they are even pay huge money to TSMC to do not make enough ATI chips! Think about it!

[TheMailMan78]

Originally Posted by Benetanegia

That's not what I've been told by my friends working in distributors and stores here. Demand is higher, there's no doubt of that, but more people end up leaving with a GT200 than with a HD5xxx card. There's very few HD5xxx cards out there and since HD5xxx cards have been released there's almost no HD4xxx cards, they are gone for good. This is just temporary, but IMO enough to make for a qurter's profit.

Well if you need a 4xxx card go to Tiger. They are local here in Miami and they have STACKS of 4890s all over the damn place.

[wolf]

Originally Posted by Atom_Anti

Nvidia is a liar, they are even pay huge money to TSMC to do not make enough ATI chips! Think about it!

Wait, They are paying TSMC to bug out on ATi's 40nm chips?.... No, I don't think so.

Even if an article says it, 1. it's probably written by charlie, and 2. it's just an article.