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Nvidia Announces $141 Million Net Loss in Q2FY11

By - Source: Tom's Hardware US | B 66 comments

Nvidia's bottom line took a bit of a hit.

Nvidia today reported revenue of $811.2 million for the second quarter of fiscal 2011 ended Aug. 1, 2010, down 19.0 percent from the prior quarter and up 4.5 percent from $776.5 million from the same period a year earlier.

Things weren't all rosy, however, as on a GAAP basis the company recorded a net loss of $141.0 million, or $0.25 per share, compared with net income of $137.6 million, or $0.23 per diluted share, in the previous quarter and a net loss of $105.3 million, or $0.19 per share, in the same period a year earlier. GAAP gross margin was 16.6 percent compared with 45.6 percent in the previous quarter and 20.2 percent in the same period a year earlier.

Nvidia said that its losses were partly due to the large inventory write-down and a charge related to a weak die/packaging material set. The inventory write-down was a consequence of weakened demand for consumer graphics processing units (GPUs) as higher memory prices and economic weakness in Europe and China led to a greater-than-expected shift to lower-priced GPUs and PCs with integrated graphics.

The weak die/packaging material set was used in certain versions of previous generation MCP (chipset) and GPU products shipped before July 2008 and used in notebook configurations. The charge, of $193.9 million, includes additional remediation costs, as well as the estimated costs of a pending settlement of a class action lawsuit consolidated in the District Court for the Northern District of California in April 2009 related to this same matter. The settlement is subject to certain approvals, including final approval by the court. Excluding this die/packaging material charge and the associated tax impact, non-GAAP net income was $20.1 million, or $0.03 per diluted share.

"Rapidly changing market conditions made for a challenging quarter," said Jen-Hsun Huang, Nvidia's CEO and president. "We delivered excellent results in Quadro professional graphics, Tesla GPU computing, and our Tegra system-on-a-chip business. But our GeForce consumer business fell significantly short of expectations amid weak PC demand in Europe and China. Although demand among end-users remains uncertain, we expect to drive revenue and grow market share with new products that are gaining momentum in each of our businesses."

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Top Comments
  • 36 Hide
    JeanLuc , August 13, 2010 5:36 PM
    Low consumer demand? Err ATI couldn't build em quick enough when they launched the 5000 series.
  • 36 Hide
    Anonymous , August 13, 2010 5:32 PM
    The losses were due to AMD/ATI selling superior hardware. Period.
  • 25 Hide
    ca87 , August 13, 2010 5:31 PM
    Yeah blame it on low demand. But we all know u are lossing money bcos of ur G_Toaster. Get real nVidia
Other Comments
    Display all 66 comments.
  • 5 Hide
    mrmike_49 , August 13, 2010 5:27 PM
    that's surprising that it's that big a loss
  • 25 Hide
    ca87 , August 13, 2010 5:31 PM
    Yeah blame it on low demand. But we all know u are lossing money bcos of ur G_Toaster. Get real nVidia
  • 36 Hide
    Anonymous , August 13, 2010 5:32 PM
    The losses were due to AMD/ATI selling superior hardware. Period.
  • 36 Hide
    JeanLuc , August 13, 2010 5:36 PM
    Low consumer demand? Err ATI couldn't build em quick enough when they launched the 5000 series.
  • 11 Hide
    jgiron , August 13, 2010 5:37 PM
    it took them a long time to come out with Fermi and with the hunger power source of the GPU melting the ice caps many people purchased the lower cost, lower PSU usage AMD products. They need to make new products in the lower $100 range instead of the high end $400 market. Right now all I see is the good old 9800 GT and the 240/250 for under $100.
  • 22 Hide
    hellwig , August 13, 2010 5:46 PM
    Nvidia has been seeing more and more engineering issues as of late. They couldn't reduce the GT200 architecture, and thus couldn't make a cheaper component for the maintstream market. Then their latest release, Fermi, is delayed and experiences yield issues. I think the lack of new product is a bigger factor than Nvidia is letting on. I think a lack of demand results from rebadging a GPU three times and assuming the consumer is just going to keep buying it.

  • 6 Hide
    Computerrock1 , August 13, 2010 6:02 PM
    I hope that the 450 will come out on a smaller die, more efficient, less power consumption and less heat. But we all know that won't happen.
  • 19 Hide
    Onus , August 13, 2010 6:16 PM
    Fermi was way too late, and until the GTX460, too hot, and too power-hungry; in short, too FAIL. I really hope for their sake (and ours), that they aren't limited to hoping that one chip (GTX460) can save their bacon, with the HD6000 series looming.
  • 1 Hide
    LORD_ORION , August 13, 2010 6:16 PM
    240 was a joke, fermi was late and underwhelming, Intel stuck it to Ion and the ATI 5xxx series put the beats to their lineup all across the board.

    So this is not really a surprise.

    However, releasing things like the 460 will put them back in black. It is a good card.
  • -7 Hide
    mattclary , August 13, 2010 6:30 PM
    Kami3kOnly took 6 posts for Godwin's law to appear.


    And three more for someone to needlessly point it out.
  • 1 Hide
    shloader , August 13, 2010 6:34 PM
    Seeing their diminished presence in the chipset/IGP area for mainstream PCs is kinda depressing cuz it made me feel like their presence in the discreet graphics market may somehow follow. I like my 8200 and its VDPAU capability. In fact my HTPC and office PC have nVidia cards on top of ATI based boards just because, at the time, they were more Linux friendly. But right now they're behind ATI. Not greatly, but noticeable.
  • 1 Hide
    blasko229 , August 13, 2010 6:38 PM
    ATI skeet skeet skeet.
  • 4 Hide
    descendency , August 13, 2010 6:45 PM
    ca87Yeah blame it on low demand. But we all know u are lossing money bcos of ur G_Toaster. Get real nVidia

    If people would stop putting them in laptops and start putting them in the kitchen, it might make sense.
  • 2 Hide
    rohitbaran , August 13, 2010 6:55 PM
    Well, so much for the so called wonderful powerful Fermi. They can claim that it was due to chipsets, lawsuits but their latest graphics line isn't profitable to them at all. They can maintain market share with good pricing, but they can't maintain profits. Enough said.
  • 5 Hide
    Snipergod87 , August 13, 2010 6:58 PM
    I was curious how Nvidia would do this year, they were very late to release their new GPU's giving AMD/ATI a huge advantage. Fermi was also over hyped (until G104 (ie GF460). Hopefully the 460 will help them cut their losses, I am all for a competive market. Also the lack on onboard graphics for Intel chipsets is a huge loss for Nvidia. Before you say im an Nvidia fanboy, all my computers are Intel CPU's and ATI graphics
  • 19 Hide
    wing2010 , August 13, 2010 6:58 PM
    "weakened demand for consumer graphics processing units (GPUs)"

    should be

    "weakened demand for Nvidia graphics processing units (GPUs)"
  • 13 Hide
    Strider-Hiryu_79 , August 13, 2010 7:06 PM
    141 million net loss is due to the amount of software developers they paid off to have said developer's games favor nvidia over ATI for FPS results.
  • 7 Hide
    lashton , August 13, 2010 7:10 PM
    mrmotionYou know I almost didn't read this article because i had a feeling there would be a lot of ignorant comments at the bottom... Total lack of surprise, here they are. I say wait till the next quarter or maybe the one after that to truly say if ATI spanked Nvidia or not. At the very least understand that balance sheets arnt black and white...

    and here it is guys finally an nVidia fanboy response, face it we all know why nVidia made the loss even nVidia fan boys like you do, no smoke screen will cover the fact the 240 was way too weak, rebagging GPUs 2 or 3 times! and of course the joke aka GTX480/GTX470
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