A few days ahead of the introduction of the first Tegra 3 device, Asus' Transformer 2 tablet, and the announcement of the Nvidia's Q3 earnings results, a negative sentiment about the company's mobile processor success is building among analysts.
According to one report, several analysts have lowered Q3 and Q4 revenue expectations based on what they believe is an existing and developing weakness in GPUs and ultra-mobile Tegra processors.
Barron's said that UBS’s Uche Orji cut the revenue forecast for Nvidia's Q3 GPU business from $572 million to $543 million and the Tegra processor result from $178 to $136 million. Needham & Co.’s Rajvindra Gill pointed out that there may be "2 million to 4 million units of excess non-Apple tablets" in the market that need to be sold, which may ultimately affect Nvidia with a revenue shortfall of $40 to $80 million in Q4.
Of course, that inventory does not bode well for Tegra 3, which is set to make a buzz in the Christmas buying season. There won't be, however, much Tegra 3 inventory until Tegra 2 devices are sold. Response to the Transformer 2 tablet may be a good indication how well this new processor will do during the fourth quarter.
Market research firm JPR recently reported that Nvidia lost overall graphics market share to AMD and Intel as it is giving up the integrated graphics chipset market. However, JPR pointed out that Nvidia gained 10.9 percent market share in desktop discrete during the quarter.