Nvidia's revenue dropped 5% with a weak PC market and lost $196M on production problems with its notebook graphics processors. Competitor AMD cut its prices as the company was struggling to keep up, but in the second quarter the price cuts proved detrimental to Nvidia. Nvidia lost $120M in the quarter and has a large amount of low margin inventory left over as AMD beat out Nvidia on price. However, Nvidia announced a $1B addition to its stock buyback plan which increase shares 10%.
Nvidia and Intel are in a dispute over a 2003 licensing agreement that allowed Nvidia to provide chipsets for Intel's microprocessors. However, Intel says that Nvidia cannot provide the chipsets for Intel's next generation processor, Nehalem. This causes a problem for PC makers as the Nvidia chipses are the only chipsets available that allow a PC to run two or more Nvidia graphics cards. As a resolution, Nvidia plans on offering a special chip for the first Nehalem model that will allow this functionality with an intel chipset.
Rambus has sued Nvidia saying that Nvidia has infringed on 17 of its patents. Rambus has been trying to negotiate a license with Nvidia for the last six years.
Nvidia reported weak global demand, intense pricing pressure from AMD and Intel, and product delays. Nvidia will incur $150-$200M from a product delay on some of their graphics processors. The stock has plummeted as a result.
Nvidia has announced the release of its Tegra processors that are designed for Netbooks. Netbooks, or mobile internet devices, are light and portable mini notebooks with internet access. The release of this chip puts Nvidia in direct competition with Intel's Atom processors.
Nvidia profits rose 34% in the first quarter of 2008. Demand for graphic performance is increasing every year and drove revenues up 37%. However, Nvidia expects sales to take a large drop in the upcoming year in response to the slowing economy. R&D spending was increased 38% to combat increased competition from semiconductor giant, Intel.
The court ruled that NVIDIA did not harm 3dfx creditors when NVIDIA took over part of 3dfx Interactive in 2001. 3dfx wanted $100M in damages to be paid to them following the company's bankrupcy.
NVIDIA Q1 FY2009 outlook was announced and the company expects sales above the seasonal norm.
Nvidia announced double profits from a year ago, on strong sales of PCs and laptop computers. The company raised its outlook for the current quarter above analyst's expectations, sending its shares up 8.1%, or $2.76, to $36.60 in extended trading. However, problems in the broader market dragged shares down.
Analyst Doug Freedman of American Technology Research set a target price of $30 for Nvidia. Analysts' mixed short-term outlook prompts profit-taking.
DRAMeXchange research reported NVIDIA increased chipset market share by 4.4% despite not meeting expectations.
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