Nvidia Announces $141 Million Net Loss in Q2FY11

By Marcus Yam
published

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."

Marcus Yam
Marcus Yam
Marcus Yam served as Tom's Hardware News Director during 2008-2014. He entered tech media in the late 90s and fondly remembers the days when an overclocked Celeron 300A and Voodoo2 SLI comprised a gaming rig with the ultimate street cred.
66 Comments Comment from the forums
  • mrmike_49
    that's surprising that it's that big a loss
    Reply
  • ca87
    Yeah blame it on low demand. But we all know u are lossing money bcos of ur G_Toaster. Get real nVidia
    Reply
  • The losses were due to AMD/ATI selling superior hardware. Period.
    Reply
  • JeanLuc
    Low consumer demand? Err ATI couldn't build em quick enough when they launched the 5000 series.
    Reply
  • jgiron
    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.
    Reply
  • shaun_shaun
    Hitler was right..this is all Jen-Hsun Huang's fault !!!!
    Reply
  • hellwig
    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.

    Reply
  • Computerrock1
    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.
    Reply
  • Onus
    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.
    Reply
  • LORD_ORION
    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.
    Reply