[Arun]

http://phx.corporate-ir.net/phoenix....050&highlight=

Here's the usual transcript, sadly I missed many of the concrete figures that were given regarding the growth of the different segments. Anyhow...

[Usual Disclaimers]

CEO
- Another record quarter and record year.
- [Income Figures]
- [New Products/Initiatives]
- [CUDA as a first step towards Heterogenous Computing and also interesting for consumer workloads]
- [New Products/Initiatives including Hybrid SLI]
- [Growth percentages, MCP was the lowest at +7%]
- [Mental Images & Ageia acquisitions]
- Very satisfied with our strategic position heading into Fiscal 2009.

CFO
- Differences between GAAP and non-GAAP is stock compensation and Mental Images charges.
- Notebook and MCP were up slightly at 1 and 2% sequentially.
- Desktop was up 69% year-over-year.
- Consumer business [mostly handheld] declined.

- Some cost issues with the 8800 GT during the quarter which we hope to resolve in the next two quarters.
- The revenue for Mental Images during the quarter was less than one million dollars.
- Employees up 902 year-over-year, two thirds of that being R&D.
- Cash was down $43M quarter-over-quarter. $178M stock repurchase.
- Cash flow a little bit over $250M in the quarter.
- Capital expenditures were $70M in Q4.

Outlook
- We expect revenue in Q1 to be better than seasonal.
- We believe revenue will be slightly down.
- We will get back on track to improving gross margins, will be flat to slightly up.
- Operating expenses will increase 8-10% due to less vacation and $7M extra charges.
- Tax rate will be higher in 2009 since the R&D Tax Credit hasn't been renewed.

CEO
[...]
"The CPU has become good enough for most users."
[Enthusiasm about low-end CPU + high-end GPU configurations]
[...]

---
Q&A
---
Q: Marv, Q1 slightly stronger than seasonal - how do you perceive seasonal and that strength? Strength in desktop?
A: Seasonal is down 5% historically. PC in general is 5-10%. So I mean it'll be down less than that.
Regarding desktop, performance GPUs are doing very well (8800GT).
Q: Notebook arena volatility? + Growth in the 20% range?
A: Notebook in Q4 was up 1%, it certainly didn't decline. I would expect it to follow seasonality in Q1.
Regarding 2008, I don't think I have any update compared to what I said earlier.
Focus on growth in desktop GPUs, growth in MCPs, growth in Workstation.

Q: April quarter, strength in the desktop GPU market. Do you see growth in the overall business?
A: It's all over the segments, increasing adoption of the GPU. Bias towards slightly higher-end GPUs.
People understand that rebalancing the system to be more GPU-centric will result in much higher performance.
One PC OEM after another, they are increasing the budget allocating to the GPU.
Q: Competitive landscape in MCP? Notebook market? Dual-chip X2 from AMD?
A: We have the only Motherboard GeForce solution for both AMD and Intel.
Anybody who doesn't want to sacrifice a rich graphic experience and not sacrifice compatibility,
we believe our GPUs on the motherboard are ideal. This is our first year for that on the Intel platform
and we'd expect that to do quite well. We're enthusiastic about MCP.
[marketing about X2 vs 8800GTX] "We will shortly announced Tri-SLI". [errr?]

Q: Cost issues regarding 8800 GT?
A: Yeah. Hmmm. 8800 GT was ramped probably faster than any other high-end GPU in our history.
In just 4 months of production, we shipped 2 millions of them. Yet the die size is larger than any other GPU.
We had some manufacturing challenges, but now yields should be much better going forward.
Marv: From my standpoint, it was about getting the product out. We focused on that even though cost was high.
Q: Ageia?
A: [...] Our strategy is to port the physics engine on top of CUDA.
Our expectation is that this is going to encourage people to buy even better GPUs. [...]

Q: Timeline for when we should start to see the impact in the actual product offering?
A: We're working on porting the physics engine to CUDA right now.
Every CUDA-enabled GPU will be able to do it. [...]

Q: Segment breakout? When could Ageia be accretive? 8800 GT costs? Need to port to 65nm?
A: [...] Consumer was down 18% quarter-to-quarter. [...]
"8800 GT costs is just about doing the process engineering [...]"
Ageia doesn't have high operating expenses [...]

Q: CUDA? Requires a CPU business?
A: We believe in Heterogeneous Computing, the CPU is already there [from Intel/AMD], it's fabulous [...]
[GPU Computing marketing] [Physics marketing]
Q: DX10 Chipset. What are your expectations there?
A: In order to get Vista Certification by the second half of the year, you require DX10.
So I think the answer is we'll get there as fast as possible.

Q: X2-type of products, will NVIDIA introduce products like that? Will that become the standard at the high-end?
A: We would do an X2-like product only if it delivered performance that's possible only
But there's no question a single GPU approach is better. But either way, it has to be the absolute highest performance.
If a X2 has the highest performance, it will be accepted. Otherwise, you'll have big problems.
Q: In the near-term?
A: [huge laughter] We can't talk about future products.
Q: Cash?
A: [...] Intend to buy more stock back in Q1.

Q: Growth targets for the year still around 20%; did you discuss share gains etc.? AMD in the notebook area?
A: Maybe we're just unsuccessful in communicating this, but the entire GPU market is booming.
We might be gaining share but it's not significant. [...] We're just selling more GPUs and slightly higher-end.
Q: For all platforms? Desktop/Laptop/Workstation?
A: Absolutely.
Q: US vs International demand?
A: Not dramatically different demand in the different regions.
Our expectation is that the growth of GPUs will overcome the seasonalities.
Q: Pricing environment?
A: Pricing is good. More money spent on GPUs so that helps Average Selling Prices for the entire GPU business.

Q: ASPs?
A: Up nicely, since we shipped a lot of 8800 GTs.
Q: Operating expense growth in Q1; what about after Q1?
A: Working hard to keep it flat, but we'll see how successful we are.

Q: Supply etc.?
A: We are the world's fabless semiconductor company.
The products that we build are very complex and the die sizes of our largest GPUs are significantly bigger than CPUs.
So these processors consume a lot of wafers, it's imporant we work very very closely with our partners.
TSMC has done a wonderful job for us, and my expectation is we'll get the fabless model to new heights.
So we obviously take supply very seriously.
Q: Lead time?
A: It hasn't really changed.

Q: Guidance for better than seasonal for Q1. Unique for NVIDIA?
A: I think the GPU market is just growing. It ought to help anybody who builds a GPU.
The way I see it is that visual computing is just becoming ever more important.
Q: Competitive landscape for the fiscal year. Unit share or revenue share perspective for main business lines?
A: Can't break that down, sorry. [market is growing] [segmentation of the market and increase of ASPs]
Q: Gross margins. TSMC has talked about trying to renegociate pricing. Did this affect the margins?
A: Gross margin impact of 8800 GT was completely my fault. It has nothing to do with TSMC.
We'll have to take all of that responsibility ourselves. But the good news is that since it's entirely our fault,
we can fix it entirely ourselves. Can still expand margins.

Q: Competitive landscape in Notebooks. You vs AMD and IGPs in the next cycle?
A: In the notebook segment, AMD has wonderful offerings. Don't forget they still have a terrific GPU design organization.
Between NVIDIA and ATI, or AMD now, it is the unambiguously the two best GPU design teams the world has ever seen.
I give them a lot of respect. And in the lower-end segment, we can't differentiate against them. So we don't expect
to win much of the business. In the upper-end, we can differentiate and we invest much more in R&D.
Q: Inventory increase?
A: New products in the pipeline.

Q: Overall PC environment opinion?
A: We're fine. All we see is fine. We watch every single week around the world, and it looks good for us.
I don't really know what else to say.
Q: OEM vs Whitebox difference?
A: Not really. I think it's possible that the SKUs we are in are selling well and people are just prefering
platforms that we are designed into, but I don't really know.
[visual computing & reallocation of resources within the PC]
I think it's logical that should be a permanent thing.

There's also something at the end that I didn't properly follow because I didn't realize how interesting it was until it was over, sigh. If I understood properly, the cost issue with the 8800 GT is that they had to writedown some of their inventory. Yet it's also a yield issue, so I'm not completely sure what the inherent problem actually was. On the plus side of things, they confirmed that they sold no less than two million G92s already.

A noteworthy point is also that Jen-Hsun claimed they were working on porting the PhysX API to every CUDA GPU right now. I don't buy that though, it doesn' tmake any sense in my mind (see: my posts in the Ageia thread). And finally, they downplayed market share a lot (implying they expected to keep it roughly flat at best) and complimented AMD on their notebook solutions with an emphasis on the low-end... I wonder how many gazillions of design wins AMD has with the 55nm RV620 for them to already be presenting things that way!

Oh, and there wasn't a single mention of the APX 2500. That really surprised me given how much Jen-Hsun bragged about the GoForce 6100 at last year's conference call. I wonder why he decided not to talk about it - maybe because the handheld business in geenral isn't doing too well and he doesn't want analysts to think about it too much since he knows they'll be skeptical (especially since the relatively low level of analogue integration). Oh well, hopefully they'll talk about it in the next few non-quarterly CCs.

[Voltron]

I don't know why you wouldn't believe him about the CUDA port. Even if its not earth shattering acceleration, surely there is some speedup than can be achieved, at least on certain effects, using the combination of a CPU and GPU. And since since PhysX already supports CPUs this does not seem like a big deal. It may not be as exciting as what will come in the DX 11 era, but it surely will be something even if its more hype than substance. "Heterogenius" is what i like to say.

As far as they "writedown" goes, assuming Marv was being literal when he said "writedown" at the end of the call, it may have been there were some particularly bad yielding batches that they just wrote down. Or it was just his way of saying that they have already sold the low yield stuff. Indeed, with a hot product you wouldn't think they would have too much inventory left. Seems like they were pretty confident issues had been solved, but were maybe hedging a little just in case. Or another possibility is that is more than usual had to be turned into lower performance parts that sell for much less - 8800 GS or 8600 or whatever.

[Geeforcer]

For a complay who's profits and revenue "peaked" 2 quarters ago they sure seem to be doing ok.

[XMAN26]

Arun, could you comment on this story:
http://www.thestreet.com/_yahoo/news...FREE&cm_ite=NA
an interesting read.

[ShaidarHaran]

Interesting wordplay WRT a potential "9800 GX2" product. Either it's just typical marketing speak (hence the "we can't comment on future products") or it's straightforward and the next high-end part will be a single monolithic die afterall. Here's hoping for the latter.

[Tim Murray]

Originally Posted by XMAN26

Arun, could you comment on this story:
http://www.thestreet.com/_yahoo/news...FREE&cm_ite=NA
an interesting read.

he mentioned this earlier--something along the lines of "Freedman is pretty much a moron"

[_xxx_]

Originally Posted by Tim Murray

he mentioned this earlier--something along the lines of "Freedman is pretty much a moron"

Which is surely true.

[Arun]

Originally Posted by Voltron

I don't know why you wouldn't believe him about the CUDA port.

I replied semi-directly to that in the Ageia thread, fwiw. Either way, if they don't do what I presumed they should do and their strategy turns out to be a technical or market failure, then I'll consider myself right anyway...

As far as they "writedown" goes, assuming Marv was being literal when he said "writedown" at the end of the call, it may have been there were some particularly bad yielding batches that they just wrote down. Or it was just his way of saying that they have already sold the low yield stuff. Indeed, with a hot product you wouldn't think they would have too much inventory left.

Yeah, that makes more sense than what I was thinking of, cheers!

Originally Posted by XMAN26

Arun, could you comment on this story:

As echoed by Tim, Doug Freedman is nuts. He MIGHT be right that there's a problem with Puma, but I don't think anyone else has heard of that and his track record there really isn't good enough for me to take him seriously.

As for NVIDIA taking over AMD, they could do so. If Jen-Hsun was a complete retard, that is! It's an order of magnitude more expensive than buying VIA, has tons of regulatory issues, and doesn't even give you as good technology for single-chip integration! I'm not trying to be negative about AMD here, I'm just pointing out there is plenty of overlap and that the business strategies wouldn't be easy to reconcile. And given their amount of debt, they wouldn't be a bargain despite their low market capitalization. Doug's conclusion was pure comic genius, btw: "with the upside coming from Huang's ability to re-architect AMD's design".

Originally Posted by ShaidarHaran

Interesting wordplay WRT a potential "9800 GX2" product. Either it's just typical marketing speak (hence the "we can't comment on future products") or it's straightforward and the next high-end part will be a single monolithic die afterall. Here's hoping for the latter.

The audio made it incredibly clear in my mind that they would release a GX2 in the short-term but that, long-term, they are now dedicated to a single-chip roadmap for the sustainable future. So that confirms both the 9800 GX2 and the monolithic GT200 rumours.

[bigtabs]

Originally Posted by Arun

The audio made it incredibly clear in my mind that they would release a GX2 in the short-term but that, long-term, they are now dedicated to a single-chip roadmap for the sustainable future. So that confirms both the 9800 GX2 and the monolithic GT200 rumours.

nVidia have misdirected us quite successfully in the past, but I hope that is correct.

[MTd2]

NVIDIA share's fell 16.42 %, to 22.61 (-4.12). Why?

[INKster]

Originally Posted by MTd2

NVIDIA share's fell 16.42 %, to 22.61 (-4.12). Why?

Probably because in the days just before the CC they had climbed quite a bit too ?

[AlphaWolf]

Originally Posted by MTd2

NVIDIA share's fell 16.42 %, to 22.61 (-4.12). Why?

Perhaps people were expecting it to do better. Share price is a reflection of how well stockholders view a companies future.

[Jawed]

Price on Feb 15 2007 - 22.50
Price on Feb 14 2008 - 22.73

Considering NVidia's growth this past year, the irrationality of the "market" is clear to see...

Jawed

[Speccy]

http://blogs.barrons.com/techtraderd...d=yahoobarrons

Analysts appear not to like the gross margin hit caused by G92, among other factors.

[BRiT]

Originally Posted by MTd2

NVIDIA share's fell 16.42 %, to 22.61 (-4.12). Why?

WATSSL? Does Microsoft have anything to do with this?

[nutball]

Originally Posted by MTd2

NVIDIA share's fell 16.42 %, to 22.61 (-4.12). Why?

"Buy on the rumour, sell on the news".

[Arun]

AFAICT, four factors:
1) Gross margins (G92 hit while guiding only 'flat to slightly up' for Q1).
2) Operating Expenses (up this quarter; guided up 8-10% next quarter).
3) Tax rate (R&D Tax Credit has not yet been renewed; higher no matter what).
4) Market share fears (Peaking in desktops; losing in notebooks).

Regarding 1, this should be taken in the context of NV's usual guidance: they're highly conservative regarding both margins and revenue improvements and they very often guide 'flat to slightly up'. The fact analysts still don't understand that, despite them beating estimates every single time for that reason, is rather sad.

Regarding OpEx, NVIDIA's stated strategy has always been to try to keep OpEx at a specific percentage of the business, but if profit goes up faster than expected, it'll fall below that and they'll try to adjust it upwards the next year. This aligns perfectly with Marvin Burkett's statement that they wanted to try to keep it flat afterwards. And the fact so much of that adjustment is done in one quarter is due to acquisitions and the fact it's always a high quarter in terms of OpEx. Nothing to see here, folks.

Regarding the Tax Rate, the R&D Tax Credit will very likely be renewed and NV has always been conservative in terms of tax rate guidance. Once again, there's nothing to see here.

As for market share, I think that's a very legitimate concern. However, Jen-Hsun's statements make it clear that where they'll be losing share is in the low-end, which is presumably because of how fricking awesome RV620 is. On the plus side of things, that means they'll lose a lot more unit share than revenue share, although the latter could still be very substantial.

I think the problem with NV's valuation right now, though, is that even if they lose share they're undervalued as long as the industry growth is good enough to compensate. The P/E is absurdly low for what still is a growth company; the problem is that some analysts started thinking they'll suddenly start shrinking (2009 estimates lower than 2008 for some!) and that's downright absurd.

[Arnold Beckenbauer]

Originally Posted by Arun

http://phx.corporate-ir.net/phoenix....050&highlight=

...

A noteworthy point is also that Jen-Hsun claimed they were working on porting the PhysX API to every CUDA GPU right now. I don't buy that though, it doesn' tmake any sense in my mind (see: my posts in the Ageia thread). And finally, they downplayed market share a lot (implying they expected to keep it roughly flat at best) and complimented AMD on their notebook solutions with an emphasis on the low-end... I wonder how many gazillions of design wins AMD has with the 55nm RV620 for them to already be presenting things that way!
...

I think, they (NV) just want to make people believe, that they need a second or third GF8 for "PhysX" and they need them (second or third GF8) better today than tomorrow: Every GF8 supports CUDA. NV's boss says, they port PhysX to CUDA. Ergo: Every GF8 supports now PhysX. Senseless, isn't it?
But read this:
http://www.tgdaily.com/content/view/36076/135/

It's the same crap like 2006 with "SLI PhyX" (Forceware 90 For NVIDIA SLI PhyX) or Crossfire Physics.

[Sxotty]

Originally Posted by Jawed

Price on Feb 15 2007 - 22.50
Price on Feb 14 2008 - 22.73

Considering NVidia's growth this past year, the irrationality of the "market" is clear to see...

Jawed

And as always it could have been over valued then, and now is properly valued.