Nvidia CEO Jen-Hsun Huang was quite vocal in early April about how smart they were and how lousy the competition was. Tuesday afternoon, during Nvidia's 2nd quarter financial conference call, he reported a huge http://www.itexaminer.com/nvidia-gives-mobile-internet-devices-a-push.aspx quarterly loss of nearly $200 million earmarked for refunds due to serious production problems with their chipsets.
There was a very significant change in Jen-Hsun’s voice tone compared to April and May when he was bragging about how Nvidia had much better products then the competition. In the mean time all Nvidia 8600M & 8400M notebook GPU’s cards, which are installed in HP, Dell, Apple, and a whole host of other manufacturers, are having overheating problems with their laptop chipsets. Just this week desktop video cards have been added to the list.
Dell jumped in first with a BIOS upgrade. Hewlett-Packard says they will fix them when returned. Apple's MacBook Pro are acting just like the rest of the laptops with Nvidia chipsets. Users are hoping Apple will take care of these problems.
The company posted sales of $893 million, down 23% from $1.15 billion the first quarter, and down 5% from $936 million a year ago same quarter. In a rare event, Nvidia reported a hefty loss of $120.9 million, compared to a net income of $211.8 million in the first quarter. Nvidia reported a second-quarter net loss of 22 cents a share, compared with a profit of $172.7 million, or 29 cents a share, for the year-earlier period. Adjusted income, which excludes stock-based compensation expenses and the warranty charge related to a production glitch, was 13 cents a share. Revenue was $892.7 million, down from $935.25 million.
Analysts had expected Nvidia to report earnings of 12 cents a share on revenue of $924.72 million, according to analysts surveyed by FactSet Research. The graphics chipmaker also announced that it was boosting its stock repurchase program by $1 billion, and may purchase up to $2.7 billion of its common stock. That could lead to some interesting speculation as to why they are doing that now.
Nvidia's Jen-Hsun admitted Nvidia also underestimated the price/performance of AMD/ATI’s most recent graphics chip, resulting in a wrong positioning of Nvidia products and forcing the company to adjust its pricing downwards during the 2nd quarter. Possibly the management was spending too much time reading its own press releases, when it had to admit it was not following closely enough the worldwide market slowdown for mid-tier to top-tier desktop computers.
Speaking of existing cards, Jen-Hsun said they will have to sell their 65nm products before they start shipping their newer 55nm products in quantity. When asked how long that would take, Jen-Hsun quietly said that all of next quarter and possibly the following quarter too. So does this mean AMD/ATi are going to be way out in front for the upcoming Christmas' high-volume sales period?
Another question was raised about the potential for entry-level desktop PCs and entry-level notebooks like Asus Eee 7” PC Mobile Internet Device. Nvidia CEO Jen-Hsun Huang admitted they have problems in that market because they do not have a shipping product tailored for them.
There was some talk about the Tegra chip having won product designs. No announcement was made about who or what that might be.
Overall, the one hour session was very matter of fact, whereas in the past Jen-Hsun Huang has been very bullish about Nvidia and their future products. X
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