Nvidia Reports 17 Percent in Profits in Latest Financial Report
Nvidia's stock had a rocky start on Thursday, as shares fell more than 5 percent following the company's announcement that fourth quarter profit had declined by 17 percent.
Instead of a net income of $171.7 million in Q4 2011, the company reported only $116.0 million. Revenue was up from $886.4 million to $953.2 million.
The company faced declines across all its major business units, which led analysts and investors to react with obvious concern. Tegra 2 sales declined much faster than Nvidia had anticipated and caused the manufacturer's consumer business to nose-dive by 42.5 percent sequentially. The hard disk drive shortage and reduced PC shipments resulted in a 3.6 percent decrease for the GPU business in the same time frame, while the professional business was down 3.6 percent. Earnings were also impacted by a payment to Rambus to settle a patent suit.
Nvidia tried to maintain a positive perspective and noted that "Tegra products shipped in 14 phones, 34 tablets and in 18 of the top 20 carriers." Vice president Rob Csongor noted that Tegra 3 is well-positioned and should deliver "renewed growth". Total Tegra sales in 2011 were about $360 million, Nvidia said. For 2012, the company expects "at least" $540 million, the majority of which will be generated via Tegra 3, CEO Jen-Hsun Huang said.
However, there are additional hurdles Nvidia has to take. Huang noted that the hard disk drive supply issues remain and the shortage of 28-nanometer wafers as well as lower than expected production yields continue, which negatively impacts the company's core GPU business. It does not seem to be an issue that can be resolved anytime soon as Huang explained that "the amount of 28-nanometer capacity in the world is not enough." He expects 28 nm shortages to persist throughout this year.
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Douglas Perry was a freelance writer for Tom's Hardware covering semiconductors, storage technology, quantum computing, and processor power delivery. He has authored several books and is currently an editor for The Oregonian/OregonLive.
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southernshark The title is misleading as it makes it sound like Nvidia is doing better, rather than worse.Reply -
doomtomb Who are the editors at Tom's again?Reply
Nvidia Reports 17 Percent in Profits in Latest Financial Report
This means that 17% of revenue was profit, i.e. surplus after costs are deducted.
It certainly does not mean this:
fourth quarter profit had declined by 17 percent
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vaughn2k nVidia;Reply
"... and the shortage of the 28-nanometer wafers as well as lower than expected production yields..."
Against; --> http://www.tomshardware.com/news/28-nm-TSMC-processing-wafer-foundry,13799.html
TSMC;
"... The TSMC's 28-NM process has surpassed the previous generation's (40-NM) production ramps and product yield at the same point in time..."
Who is telling the truth? -
alidan here is something that bugs me.Reply
a company can only make so much proffit, and can only sell so much before they sell less...
why do people bail from a company the the moment it makes money, but not as much money as before, but still makeing money?
and why do we push companies to be like apple where they sell a product for 3-5 times the production cost?
i will never understand that logic... -
cinergy Are people finally coming to their senses and understand that AMD has better bang/buck with GPUs? These "old school" hc geforce guys that think geforce=gfx card are retiring in gaming and younger generation comes in with more open minds.Reply -
lahawzel @cinergy: Enthusiast GPU sales don't account for (or at least I would hope it does not) the majority of their revenue. I'd imagine OEM contracts and things like the mobile Tegra chips are where the money rolls in, so what you said is probably not why profits declined.Reply -
phamhlam vaughn2knVidia;"... and the shortage of the 28-nanometer wafers as well as lower than expected production yields..."Against; --> http://www.tomshardware.com/news/2 13799.htmlTSMC;"... The TSMC's 28-NM process has surpassed the previous generation's (40-NM) production ramps and product yield at the same point in time..."Who is telling the truth?Reply
Both. Nvidia might have expected production to be way more than it's previous generation while TSMC is producing more 28Nm chips at a faster rate but not fast enough for Nvidia I guess.