Those rather short-term concerns are, for the most part, focused on the company's core business: GPUs for PCs. Forbes reported that Oppenheimer analyst Rick Schafer cut his rating on Nvidia shares to Perform from Outperform and canceled his $17 price target for the company.
That was a rather dramatic move, given Nvidia's strategy to diversify its business. However, Schafer still indicated that any exposure to the PC business is not seen as an advantage these days. Forbes quoted him saying that Nvidia is "the only traditional PC vendor with a credible mobile diversification strategy," while adding that "most of its GPU share gains are now reflected in estimates" and cautioning "the absence of share gains leaves [Nvidia] increasingly exposed to secularly declining PC units."
Translation: If you depend on the PC these days, you are screwed.
Schafer's advice was to leave Nvidia alone for the time being and wait until Nvidia's non-PC business becomes "more meaningful". Of course, that non-PC business has also its issues, especially since Nvidia had high hopes for Microsoft's Surface RT tablet. If it is true that Microsoft is cutting Surface RT order from four to two million units in Q4, Nvidia is sitting on two million Tegra 3 processors that had been reserved for Microsoft's tablet. Windows RT may also have some launch issues, further impacting Nvidia's Tegra 3 sales.
However, Nvidia is one of those tech companies that may be easily able to wait out the current recession and any Windows 8 problems. The company has more than $3.4 billion cash on hand.
nVidia relies on Microsoft gaining market hare. While MS is too late to the party where iOS and Android are rocking.
OK so here is my first go at being an analyst for Q1 of 2013. Due to the laborization of the labor pool in the industry the labor rate will go up. As a result we will see prices on electronics go up. Profits will go down for many electronics manufactures but this will not affect the share holders because the manufactures will simply cut jobs to balance the cost of laborization.
That being said the benchmarks of the Tegra 3 are pretty impressive so I think Nvidia will be fine in the near future.
... noticed the name Wolfgang ....
... stopped reading ...
When there is an emerging market (like the current ARM market) where there are a multitude of players, it is more important to get your foot in the door and offer solid products that have a good margin. Grow too fast in this new market and you loose your ability to keep the company's growth in balance. The last thing you want to do is have 1 good product, spend all your money on increasing production, and then loosing track of R&D, or marketing, or internal costs in the form of retirement or benefits plans.
nVidia is doing pretty good so far. They have a decent road map, and are sticking to it. They are not turning into AMD where they have to sell off parts of their company every year in order to keep afloat.
I saw that and was like, "Dafuq did I just read?" Seriously, I consider myself to have a strong vocabulary and that is the first time I have ever seen the word "secular" used according to Merriam-Webster's 3c definition: "of or relating to a long term of indefinite duration". I didn't even know the word could mean that. :p
Also, I still think there's a lot of overly-enthusiastic doom-and-gloom talk about "The End of PCs as We Know Them!!1" Are PCs going through a decline now? Yes, because consumers have decided that other form factors can do the things that they previously needed laptops to do. But we're hardly at the point yet where laptops can be completely replaced by tablets, and I think that we'll see a bottoming out of that decline.
Nvidia has plenty of other Android devices running on their tegra 3, for example, Nexus 7 and HTC One X. But tegra 3 is getting really old now, please work on and bring out tegra 4 already.
Fully agree AmdWilliam 1985
nVidia's early move into mobile was a critical decision for and I think they will do fine.
Beginning of 2012 Tegra 3 was the chip to have but that has quickly passed in lieu of the nice silicon coming out of Samsung and Qualcomm. It has been a year now and they need to get those designs out the door and into partner OEM devices asap. As is, they will fail to stay competitive - optimized games for tablets is not enough to carry them anymore.