Nvidia posts $141 million loss, blames weak market

Matthew DeCarlo

Matthew DeCarlo

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Nvidia has posted a worse-than-expected $141 million loss for its second fiscal quarter ending August 1, a further decline on the $105 million loss reported in the year-ago quarter. The GPU firm has had a rough stretch this year with its GF100-based products being both late and relatively unsuccessful.

However, it partly blames the deficit on increased memory costs, a weakening demand for consumer graphics chips, along with poor economic conditions in Europe and China steering customers to budget goods. Nvidia, as you well know, pays more attention to the costly performance segment.

The company's bottom line was also dented by the $193.9 million it set aside to continue repairing and replacing the faulty GPUs that plagued systems from HP, Dell, Apple and others a couple years back. The total on that fiasco is now $475.9 million, but CEO Jen-Hsun Huang believes it's just about over.


Nvidia is still blocked from making chipsets for Intel's latest processors, and although that can't help things financially, Huang believes the damage has already been done. Even if the matter were resolved, Nvidia doesn't plan to "ramp back up" the thousand engineers it had working on chipsets.

Going forward, the company claims to have a long-term CPU strategy, and that will heavily focus on ARM-based smartphone and tablet chips. "ARM is the fastest growing processor architecture in the world today," Huang said. "ARM supports Android best. And Android is the fastest growing OS..."

Permalink to story.

https://www.techspot.com/news/39962-nvidia-posts-141-million-loss-blames-weak-market.html

 
GTX 480 AND NVIDIA ARE THE DEVIL. GTX 480! Well personally I'm looking forward to the ATI HD 6000 but It still makes me sad when a company loses that much money. I know the GF100 cards sucked(except for multi gpu sli is better) but the GTX 460 is quite a nice card.
 
Yeah, I don't really see any decent cards out at the moment from them except for the 460 which seems like a really good card. I hopw their next ones do better, either that or update these ones ASAP!
 
Well I wonder if dropping your 2 biggest resellers from your latest product launches would have any impact on sales.
 
They'll recover a bit with the GTX 460, but let's face it - ATI smoked them like a cheap cigar with the new DX11 cards. Has nothing to do with a "weak market." Take a look at ATI's sales numbers and that's where their weak market went.
 
Wierd that they cited "a weakening demand for consumer graphics chips" as one of the reasons, while both AMD and Intel have seen increased demand for their graphics solutions and the 5000 series has been selling like hot cakes. 11 million plus anyone ? Wierd.
 
I would have upgraded my GTX285 to a higher end Fermi card, but they are all too power hungry and hot and so I decided to sit this generation of NVIDIA cards out. In the meantime the ATI 5000 series tempted me, but in the end the widespread reports of wonky drivers, gray screens, etc. worried me enough to decide to skip them as well (even though I have had many fine ATI cards over the years). I am going to need a faster card soon (and likely a better CPU) as I've upgraded my display to 2560x1440 and some of the games I was playing fine at 1900x1200 are suffering because of it. Since the new ATI cards look to be coming out at about the time I'll need to make a move, here's hoping the quality control issues have been ironed out. If not, I don't know what I'll do.
 
bcronin - you may want to consider the nVidia GTX 460's. They are the DX11 card nVidia should have come out to begin with. Powerful, flexible and energy efficient. Google "GTX 460 reviews" and take a look at what's being said about them. In fact, I ordered two of them just this morning for an SLI rig. Here's what I ordered and you can see the user reviews here too:

http://www.newegg.com/Product/Produ...7510&cm_re=msi_gtx_460-_-14-127-510-_-Product
 
PanicX said:
Well I wonder if dropping your 2 biggest resellers from your latest product launches would have any impact on sales.
Click to expand...
Palit and Galaxy got dropped? Bet they're surprised
Regenweald said:
Weird that they cited "a weakening demand for consumer graphics chips" as one of the reasons, while both AMD and Intel have seen increased demand for their graphics solutions and the 5000 series has been selling like hot cakes. 11 million plus anyone ? Weird.
Click to expand...
Standard corporate-speak...similar to:

"Larrabee silicon and software development are behind where we had hoped to be at this point in the project...As a result, our first Larrabee product will not be launched as a standalone discrete graphics product, but rather be used as a software development platform for internal and external use" (Intel's cancellation of Larrabee GPU that doesn't use the word cancellation)
or...
"We operate in an environment where many people feel that AMD needs to have the highest-performance CPU component in order to be successful, and I tell you, that perception is false." (Dirk Meyer explaining the delay in introducing quad core Opteron/Phenom CPU's...Dec 2007)

And since this is a finance story...
Not being a financial analyst, maybe someone could explain why nvidia's stock has increased on the back of the Q2 financial announcement. Strange that a company that has sold 16 million HD5xxx series discrete/integrated cards still lags behind it's graphics competitor in market cap
 
NVidia and ATI both need each other because they push each other and we benefit. I find that the race between them seems more like see-saw where one goes up for a while and the other down and then they reverse positions again. Good healthy competition and WE come out the winners because of it!
 
dividebyzero said:
And since this is a finance story...
Not being a financial analyst, maybe someone could explain why nvidia's stock has increased on the back of the Q2 financial announcement. Strange that a company that has sold 16 million HD5xxx series discrete/integrated cards still lags behind it's graphics competitor in market cap
Click to expand...

Possibly because AMD makes cpus and gpus...and currently they are getting their asses handed to them on the cpu front. Not to mention their profit margins are extra slim right now, and investors/traders are in it for profit. You can't discount what ATI is doing for AMD right now, they are the reason AMD isn't losing tons of money each quarter. I'm also no financial analyst but I'm quite sure it's about money.. and AMD barely makes any.

@bcronin: If you're looking for a single card solution than the 5850 typically edges out the 460 for that resolution and it was my choice before the 460 came out. But, if you want to get multiple cards than the 460 SLI seems to be the way to go. I have a 30" monitor also and I'd highly recommend a multi-gpu setup. That resolution wrecks havoc on gpus.
 
I do not like the fact that nVidia get such a big loss, however with the power hog they released they kind of deserve it
Not only that but the incorrect underfill that was used for many GPU's is actually not blown out of proportion (like I sometime feel the bad press about Fermi is)
The older G71 cards where also affected, I've got a Dell M1710 laptop with broken VGA card, Geforce 7950GTX, and if you search eBay and the net I'm not exactly alone...
In the end I swapped it out for a ATI X1400 bought from Hong Kong, not that it's fast but I wont be buying the same ASIC that got no fix at all, since Dell never acknowledged the issue on this $2000+ laptop! http://vr-zone.com/articles/3-year-old-g71m-notebook-gpu-gets-a-new-refresh/6515.html
 
I have had the following system for 10 month now, and never had any serious problems with it. In fact, it was and remains the best system I ever built.

Video: HD5870
CPU: Core-i7, 860
OS: Windows 7 Ultimate 64-bit
Memory: 8GB
Boot: Intel X25-M, 160GB, 32nm

Drivers update from ATI are frequent, and they sorted all minor issues within a few first months. I run plenty of games on it, and they all worked superbly: Quake 3 and 4, Unreal I, II, 2003, 2004 and 2007, Warcraft I, II and III, StarCraft I and II, Need For Speed (5 versions). None of them has any problems, except Starcraft I, which is just probably OS problem more than they video card.

If I were to put together a new PC, then the only alternative to HD5870 would be HD5970, but that's as far as it goes.
 
My only problem is until crossfire starts scaling better I'll buy nvidia in case I ever want to run multiple cards. Even the HD 6000 isn't tempting me anymore because if I want to use multi gpu I will most likely get smoked by the similar priced nvidia multi gpu setup.
 
princeton said:
My only problem is until crossfire starts scaling better I'll buy nvidia in case I ever want to run multiple cards. Even the HD 6000 isn't tempting me anymore because if I want to use multi gpu I will most likely get smoked by the similar priced nvidia multi gpu setup.
Click to expand...

That's a good enough reason, hopefully the combination of Northern Islands and over a years worth of driver development will be able to remedy Xfire scaling.
 
The main problems with that is...
NI is likely to be a year away at least, and that is predicated upon a lot of IF's, including an on-schedule 28nm process with acceptable yield, and good design execution.
Secondly...
The timescale for NI (and it's inevitable nvidia counterpart) exceeds one generation of GPU's, and has little to do with what ails CFX scaling now, which is...
Catalyst 10.7 offers worse scaling than 10.6, which in turn seems to offer worse scaling than 10.5. I would certainly hope that Terry Makedon and Co. (if there is a Co.) get their s*** together prior to Q3 2011.
 
Both BFG (RIP) and XFX were/are probably more niche-sellers. Their profile would exceed their sales simply because of how they marketed themselves, and became synonymous with the enthusiast sector- lifetime warranty/trade-up/overclocking/non reference cooling. Neither company (nor similar companies such as EVGA) produce sales approaching Palit or Galaxy.
For every exotic GTX 2xx, how many bog-standard 8400, 9500, 9600, G210 etc. series cards would XFX or BFG sell? Bear in mind the respective geographical sales markets...Both Palit and Galaxy, along with the two big OEM's (Foxconn and PC Partner) sell massive quantities of cards in Asia, and China in particular.
["Being Nvidia’s largest single customer for graphics chips and AMD’s 2nd"-Quote-Source #1], [Source #2], [Source #3],

BFG's demise was predicated upon Best Buy's decision to go with Galaxy as it's preferred graphics vendor it would seem (original story, Jan 2009), and confirmed by BFG Tech today (17th Aug,2010). Since BFG has been 1. overlooked by nvidia in preference to Palit, Galaxy and Zotac especially, and 2. basically killed as a company by losing one retail outlet to Galaxy, it would seem that your hypothesis is a little flawed.

FWIW nvidia probably dodn't "drop" XFX, I think you'll find that XFX courted AMD in order not to be in the situation BFG Tech now finds itself in, since unlike EVGA (the other nvidia-only GPU AIB) it doesn't have a successful Intel motherboard business to fall back on- and no, I don't count the ill-fated MB-X58I-CH19 as a motherboard business.
 
Basically its an off the cuff remark which I drew in reference to the Techspot aricle here: https://www.techspot.com/news/38408-xfx-will-not-offer-fermibased-graphics-cards-at-launch.html

But I'm not following how your sources are confirming your point. If I check the market capitalization from your Galaxy link and compare it to your XFX link (Pine tech), Galaxy rates at $150,000,000 USD and Pine rates at $229,000,000 USD. Are you drawing the sales conclusion from a different factor? It'd be nice to see Palit's market cap to see its position in reference to the other 2, as a quote from the director of marketing doesn't hold much water with me. But I can't seem to find their info listed anywhere. BFG's website claims they were #1 in market share http://www.bfgtech.com/about.aspx but that too I would take with a grain of salt.

I think there's a lot more speculation than fact regarding the articles about BFG, even your HardOCP link says "BFG’s problems were largely graphics card related, but not related to GTX200. Sales and profit margins on that card were quite good actually. The biggest problem was GTX400 (Fermi) allocation."

And while you may be right about XFX & BFG not being nVidias top 2 resellers, I don't think it's a discredit to the notion that not using these 2 enthusiast brands when releasing an enthusiast chipset will result in lower sales than otherwise. Perhaps not $141 million, but thats hard to say when most of the articles are speculation anyway.
 
The links I provided were solely to access the company details. Working on market cap is all well and good for Pine (XFX), but you might want to bear in mind that Galaxy Semi Conductor (GSC) is only one of the seven companies that make up "Galaxy". Assessing Palit's size and distribution is probably even harder since XpertVision, and whatever Pacific rim only brands are tied with (probably) different arms of the overseeing corporation -as is Gainward, arguably a better known Palit "brand".
As for the assertion of BFG seing itself as "Number 1", I think, if you read the actual PR :
With these innovations and an unrivaled level of customer service, BFG quickly rose to #1 market share in the category...
Click to expand...
BFG were asserting that they were number 1 in customer service, not sales.


As for your last point, I don't think I argued anywhere in my posting that the loss of XFX and BFG as nvidia AIB's were benificial for nvidia. But as I pointed out in an earlier thread, both BFG's and XFX's QC problems (especially the OCX/H2OC and Black Edition's respectively) were eroding the prestige they garnered in previous years. The fact that BFG's warranty replacement inventory has been depleted so quickly is probably a testament to too aggressive speed binning and inadequate q.c. Speaking from personal experience, I had two BFG GTX280 H2OC's -one started artifacting soon after purchase, the second died from inadequate VRM/chip contact with the waterblock interface (a common failing with this model)
While I believe you're correct in asserting that some customers have allegience to certain brandnames, I would think that having both BFG and XFX continuing to sell GTX480/470/465 cards (remembering that Q2 P&L doesn't include the GTX460) in the face of AMD HD5xxx competition wouldn't have made a substantial difference. Moreso since both company's would likely have to resort to stock clocks in order to maintain a viable warranty commitment.
 
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