CEO Jensen Huang talks of raises instead of layoffs after Nvidia issues revenue warning

midian182

Posts: 8,141   +96
Staff member
In context: Nvidia yesterday revealed that even the mighty team green isn't safe from the current economic climate—unlike rival AMD, which bucked the industry trend by having an excellent quarter. Disappointing financial reports often result in companies starting a streamlining process (I.e., laying off staff), but CEO Jensen Huang has assured employees that won't happen, at least not in the near term. In fact, staff at the tech giant have been given raises to help deal with rising inflation.

In its preliminary financial results, Nvidia revealed that the quarter ending July 31 missed expectations by a wide margin. Previous guidance put Q2 FY23 revenue at $8.10 billion, but this has been revised down 21% to $6.70 billion, marking a 19% quarter-over-quarter fall. Gaming revenue was hit particularly hard, dropping 33.33% YoY from $3.06 billion to a projected $2.04 billion.

The preliminary earnings warning isn't good news for Nvidia or its workers. Staff are likely concerned about their employer doing a Robin Hood or Facebook and cutting numbers. However, according to a report from Insider, CEO Huang assuaged those fears in an email addressing the Q2 results.

"So what does this mean for us? Do we have a layoff? No. Instead, we have given raises to take care of your families as all of you are facing sky-high inflation," he wrote.

It's unclear if Huang is talking about a new increase in pay for all staff or if he's referring to a previous raise. It's possibly the latter, given his use of the past tense.

Huang did add the caveat that future layoffs were something that couldn't be ruled out. The CEO also talked about making Nvidia even "faster, leaner, and agile."

"We will exercise extreme collaboration, a hallmark of our culture, finding every opportunity to leverage and reuse. We will find and eliminate all wasted time, process, and material," he wrote.

This isn't the first time Huang has said there would be raises instead of layoffs at a time when people expected to lose their jobs. He did the same thing during the height of the Covid-19 crisis in 2020.

Nvidia blamed falling demand and an excess of inventory for its poor quarter. Ironically, it comes after a long period of massive demand and little to no availability. The good news for gamers, of course, is that card prices keep falling as Nvidia looks to clear stock before the RTX 4000 series arrives.

Nvidia's fortunes were a contrast to AMD's. Its red rival saw revenue hit $6.6 billion in the last quarter, up 70% year-over-year.

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nnguy2

Posts: 490   +1,022
Screw nvidia. That's what you get for tying your business forecast to the fickle crypto economy.
 

Uncle Al

Posts: 9,070   +8,100
NVIDIA needs to get back to it's highest competent products and function as they did in the early years.
 

Endymio

Posts: 1,802   +1,856
Screw nvidia. That's what you get for tying your business forecast to the fickle crypto economy.
NVidia made nearly $7B in revenue for the quarter, up 3% from the same quarter one year earlier, and at a 46% gross profit margin. Their data center revenue grew 61%, impressive when you consider the economy at large is shrinking. Their statement is bad only by comparison to their earlier guidance projections.

What this actually shows is that NVidia has outgrown the gaming market, and is no longer utterly dependent upon that segment.
 

passwordistaco

Posts: 339   +790
Some good news. Nvidia probably didn't go on a hiring spree with their pandemic income. To bad they don't treat their customers as well.
 

nnguy2

Posts: 490   +1,022
NVidia made nearly $7B in revenue for the quarter, up 3% from the same quarter one year earlier, and at a 46% gross profit margin. Their data center revenue grew 61%, impressive when you consider the economy at large is shrinking. Their statement is bad only by comparison to their earlier guidance projections.

What this actually shows is that NVidia has outgrown the gaming market, and is no longer utterly dependent upon that segment.
The problem is you projected $8bil but have to guide down over a billion.

Share holders and the market doesn't like guiding down. It means you don't a have a good grasp on market conditions since you need to adjust. Doesn't matter how you spin it look at the drop in stock price.
 

Endymio

Posts: 1,802   +1,856
The problem is you projected $8bil but have to guide down over a billion.
No one likes a missed estimate -- but by your logic, a company that projected an 8 billion dollar loss and then meets that estimate is doing better financially than a firm who projects an 8 billion gain, but then guides down to only earning 7.
 

nnguy2

Posts: 490   +1,022
No one likes a missed estimate -- but by your logic, a company that projected an 8 billion dollar loss and then meets that estimate is doing better financially than a firm who projects an 8 billion gain, but then guides down to only earning 7.
Yes. If the company is in high growth and not expected to turn profit kinda Like Amazon and tesla for most of their history. 🤦🏻‍♂️
 

defaultluser

Posts: 474   +366
I mean, at least until we see proof-of-stake.

AMD's mining sales cratered precipitously after customers were able to buy 3070s at near MSRP, but we are still seeing a small contingent tying-up NVIDIA low-end cards for last-minute Etherium mining.

Once they announce POS is finished, its going to be a similar-to GTX 1070 + 1060 selloff on eBay, except massively worse (there is no other profitable coin to transition to, and you might-as-well sell your cards an buy more stake)
 

Neatfeatguy

Posts: 927   +1,607
I wonder if places are having problems moving inventory.....?

Newegg has started their Shuffle again as of yesterday. They've been posting a couple of MBs, a couple of GPUs that are note that great and some decent Ampere cards that you can try to win a chance to purchase and use the special promo key to get a discounted price.

GPUs on the shuffle the past two days have been:
GTX 1660
RX 6600
GTX 1660 Ti
RTX 3070
3 different RTX 3080 Ti models

Looks like Newegg is trying to turn a profit on these items while offering a deeper discount than you'd probably find anywhere else. I bet their stock of these items is falling out of the storage closet and they need a way to help reduce inventory that's just not moving.