NVIDIA shows signs ... [2008 - 2017]

[Silent_Buddha]

Hmmm, expectations according to that is for revenue to only decrease 4.8% while earnings are estimated to drop 54.5%.

So, it doesn't appear to be related to slower sales of the 5xx series in any way. Otherwise revenue would have dropped sharply as well. The lower margins from 5xx due to having to reduce the price due to pressure from AMD with no counters for 2+ months would also have an effect. But that would mean they actually sold more GPUs than a year ago to maintain revenue while earnings declined.

This could be related to problems with GK100 (perhaps some wafer starts, but no salvageable dies?) or with Keplar as a whole. Those would be expenditures which generated no revenue and hence would affect the earnings for the quarter.

Or there could be write offs involved. If they have a significant backlog of GTX 5xx parts. They could potentially be writing those off, with a plan to take the hit to their financial reports now and then sell them in the future to boost earnings reports in the next few quarters. Similar to what they did back during the price wars with AMD during the GTX 2xx generation. This only really makes sense if GK104 and/or GK107/106 are expected to perform poorly (low yields combined with limited wafer starts perhaps) for them in the next quarter or two. Hence needing the boost to the financial statements for those quarters. Although GTX 670 should help with any potential low yields.

Regards,
SB

 

[ninelven]

The results are already in... earnings were 16 cents/share vs 10 projected and 22 a year ago. As a result, Nvidia stock was up today....

 

[trinibwoy]

The results are already in... earnings were 16 cents/share vs 10 projected and 22 a year ago. As a result, Nvidia stock was up today....

So they beat analyst expectations by a mile? I wonder why they were so pessimistic....

 

[Kaotik]

The results are already in... earnings were 16 cents/share vs 10 projected and 22 a year ago. As a result, Nvidia stock was up today....

Hm?
This is straight from nVidia's press release

edit: Or did you mean non-GAAP? I think the projected 10 was talking about GAAP figures?

 

[Alexko]

So they beat analyst expectations by a mile? I wonder why they were so pessimistic....

Maybe analysts didn't take GTX 670 sales into account? The release was recent, but they must have been shipping to partners for a while now.

 

[DuckThor Evil]

Hmmm, expectations according to that is for revenue to only decrease 4.8% while earnings are estimated to drop 54.5%.

So, it doesn't appear to be related to slower sales of the 5xx series in any way. Otherwise revenue would have dropped sharply as well.

Geforce revenue was down 58 Million while other segments were up a bit vs year ago. Q1 also includes revenue from the 600-series.

Also a relatively small change in revenue can have a large impact to earnings in many situations. You need a certain amount of revenue to offset your costs and after the costs have been met, the revenue that comes on top brings in the cream. A crude example, a business has $1000M of fixed costs and a revenue of $1100M =100M profit. Lose 4.5% of revenue and you lost 50% of the profits.

The results are already in... earnings were 16 cents/share vs 10 projected and 22 a year ago. As a result, Nvidia stock was up today....

The projected estimate was spot on, it's just that there are different reporting methods going on. GAAP (Generally accepted accounting principles) and non-GAAP.

GAAP earnings per share was 10c, down from 22c.
Non-GAAP was 16c, down from 27c.

Companies use Non-GAAP in addition to GAAP to bring further clarity on to their numbers. Non-GAAP usually excludes certain one time expenses, amortizations of intangible assets and whatnot.

 

[Silent_Buddha]

Geforce revenue was down 58 Million while other segments were up a bit vs year ago. Q1 also includes revenue from the 600-series.

Also a relatively small change in revenue can have a large impact to earnings in many situations. You need a certain amount of revenue to offset your costs and after the costs have been met, the revenue that comes on top brings in the cream. A crude example, a business has $1000M of fixed costs and a revenue of $1100M =100M profit. Lose 4.5% of revenue and you lost 50% of the profits.

That may be but it only partially explains the loss in earnings.

Revenue is down 28.3 million while earnings are down 55.6 million, so that only covers a small bit. Margins are only down 1.3% so that's going to be fairly insignificant as well. Operating expenses are unlikely to have increased by 20+ million.

It's obviously not related to a write off so my speculation regarding that can go out the window.

So the most likely cause is problems related to R&D on Keplar (IMO) with my thinking being that there were possibly some wafer starts for GK100 with no useable dies (even as salvage parts). IE - GK104 outperformed the salvage GK100 chips. Or an even worse possibility that GK104 outperformed the full GK100 chips, but I find that extremely doubtful.

At some point if I get the time I'll have to go over their fiancial statements when they are available.

Regards,
SB

 

[DuckThor Evil]

That may be but it only partially explains the loss in earnings.

Revenue is down 28.3 million while earnings are down 55.6 million, so that only covers a small bit. Margins are only down 1.3% so that's going to be fairly insignificant as well. Operating expenses are unlikely to have increased by 20+ million.

It's obviously not related to a write off so my speculation regarding that can go out the window.

So the most likely cause is problems related to R&D on Keplar (IMO) with my thinking being that there were possibly some wafer starts for GK100 with no useable dies (even as salvage parts). IE - GK104 outperformed the salvage GK100 chips. Or an even worse possibility that GK104 outperformed the full GK100 chips, but I find that extremely doubtful.

At some point if I get the time I'll have to go over their fiancial statements when they are available.

R&D is part of "operating expenses", which did increase almost 23 million from prior quarter.

1.3% change in gross margin isn't "fairly insignificant" when it's attached to large amounts of revenue:

$953.2M * 51.4% = $490M
vs
$924.9M * 50.1% = $463M

About 27 Million dollars.

They outlined the reason for the rise in operating increase like this:

The increase in our operating expenses over the prior quarter was due to planned hiring and related infrastructure spending to support our strategic businesses, and the annual FICA reset.

So gross profit down $27M, operating expenses up $23M and we are at $50 million.

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTQwMDI0fENoaWxkSUQ9LTF8VHlwZT0z&t=1

Your GK100 part is pretty wild speculation

 

[Alexko]

That may be but it only partially explains the loss in earnings.

Revenue is down 28.3 million while earnings are down 55.6 million, so that only covers a small bit. Margins are only down 1.3% so that's going to be fairly insignificant as well. Operating expenses are unlikely to have increased by 20+ million.

According to the table posted by Kaotic a few posts above, they have. That might have something to do with the expenses related to the launch of Kepler.

 

[silent_guy]

So the most likely cause is problems related to R&D on Keplar (IMO) with my thinking being that there were possibly some wafer starts for GK100 with no useable dies (even as salvage parts). IE - GK104 outperformed the salvage GK100 chips. Or an even worse possibility that GK104 outperformed the full GK100 chips, but I find that extremely doubtful.

I have nothing against targeted speculations, but this made me laugh.

Seriously, opex can come from a lot of different things, all the usual suspects, yet somehow these are your most likely candidates? How did it even make on your list? I mean, even if your premise is correct and somehow all simulation results went out of the window and a chip performed may too slow. How would that even contribute to an increase in opex??? Same thing for the usable dies part: you're talking some early silicon here. Maybe 100 wafers? If that's all scrap, you're looking at something on the order of $100K? How's that going to influence R&D? Or are they going to hire and pay $23M / $250K * 4 = 3680 engineers for a quarter to inspect the failed dies?

 

[Silent_Buddha]

R&D is part of "operating expenses", which did increase almost 23 million from prior quarter.

1.3% change in gross margin isn't "fairly insignificant" when it's attached to large amounts of revenue:

$953.2M * 51.4% = $490M
vs
$924.9M * 50.1% = $463M

About 27 Million dollars.

That's a bit of wrong math. 1.3% would be ~12.39 million at 953.2 million revenue. At 924.9m revenue it only accounts for an ~12.02 million drop in operating profits. So yes, my use of the word insignificant was a bit out there. For some reason when I made the post last night I was thinking only ~1.2 million USD but that would have been only 0.13%. Ooops.

Either way, it doesn't account for the remaining reduction in operating profits. But at least it does bring it up to ~40.3 million due to drop in revenue and drop in gross margins leaving another 15.3 million to be accounted for.

Your GK100 part is pretty wild speculation

Yes it is, I never said it wasn't.

I suppose they could have hired another 15 million USD worth of engineers as silent_guy suggested (tongue-in-cheek) as a rebuttal.

Regards,
SB

 

[DuckThor Evil]

That's a bit of wrong math. 1.3% would be ~12.39 million at 953.2 million revenue. At 924.9m revenue it only accounts for an ~12.02 million drop in operating profits. So yes, my use of the word insignificant was a bit out there. For some reason when I made the post last night I was thinking only ~1.2 million USD but that would have been only 0.13%. Ooops.

Either way, it doesn't account for the remaining reduction in operating profits. But at least it does bring it up to ~40.3 million due to drop in revenue and drop in gross margins leaving another 15.3 million to be accounted for.

The math is fine, I just used the margin alongside the revenue to calculate the cross profits to show that there is already a $27 million difference at that level (lower cross profit vs previous Q). Add in the $23 million rise in expenses and we are at $50 million.

Your 40.3 number is the wrong one, because you can't just blindly calculate stuff from the revenue figure alone, even if my crude example sort of implied it

 

[Silent_Buddha]

The math is fine, I just used the margin alongside the revenue to calculate the cross profits to show that there is already a $27 million difference at that level (lower cross profit vs previous Q). Add in the $23 million rise in expenses and we are at $50 million.

Your 40.3 number is the wrong one, because you can't just blindly calculate stuff from the revenue figure alone, even if my crude example sort of implied it

Eh? There's no wrongness about it. If we ignore operating expenses for the moment we have...

953.2m - 924.9m = 28.3m

So that 28.3m drop would come directly out of the operating profits. We then have...

924.9m * 0.013 = 12.02m

That's the loss from going from 51.4% margins to 50.1% margins. Even if we use the former 953.2m number that still only accounts for 12.39m losses generated from the drop in margins.

So in either case you end up with 40.32m to 40.69m attributable directly to lowered revenue + lowered margins. There really is no vagueness about it.

Your example would in theory already take into account the 28.3m drop in revenue. Which then shows the incorrect absolute drop in operating profits as 26.57m which is incorrect. You can't just add a number that includes the drop in revenue to the actual drop in revenue.

Regards,
SB

 

[DuckThor Evil]

Wow sorry, but you are a bit confused... I'll try one more time.

Loss of revenue does not "come directly out of the operating profits", because revenue is not pure profit (unless gross margin is 100%), only about half of that 28,3M drop is loss of gross profit as evidenced by the gross profit % given to us.

I gave you the REAL gross profit figures. The 463 million IS their gross profit for the quarter, a drop of 27 million from the previous quarter, that is a FACT. You get the gross profit figure by multiplying revenue with the gross margin percentage, which I did for both quarters.

The 27 million figure is the combination of loss of revenue and loss of gross margin percentage. 27 Million is the net effect of those two and the actual drop in their gross profit.

$953.2M * 51.4% = $490M = gross profit for Q4
vs
$924.9M * 50.1% = $463M = gross profit for Q1

That is how you count it.

Load this PDF and look at the table after page 5, the figures are all there.

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTQwMDI0fENoaWxkSUQ9LTF8VHlwZT0z&t=1

 

[Silent_Buddha]

Wow sorry, but you are a bit confused... I'll try one more time.

Loss of revenue does not "come directly out of the operating profits", because revenue is not pure profit (unless gross margin is 100%), only about half of that 28,3M drop is loss of gross profit as evidenced by the gross profit % given to us.

I gave you the REAL gross profit figures. The 463 million IS their gross profit for the quarter, a drop of 27 million from the previous quarter, that is a FACT. You get the gross profit figure by multiplying revenue with the gross margin percentage, which I did for both quarters.

The 27 million figure is the combination of loss of revenue and loss of gross margin percentage. 27 Million is the net effect of those two and the actual drop in their gross profit.

$953.2M * 51.4% = $490M = gross profit for Q4
vs
$924.9M * 50.1% = $463M = gross profit for Q1

That is how you count it.

Load this PDF and look at the table after page 5, the figures are all there.

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTQwMDI0fENoaWxkSUQ9LTF8VHlwZT0z&t=1

I can see where you are getting confused. I was talking about operating profits. You are talking only the very basic gross profits (revenue - manufacturing costs) which is almost meaningless and has almost no bearing at all on the the financial numbers that were reported.

I think we should probably stop here, we're not even remotely talking about the same things. With regards to the operating profits my numbers are quite correct with regards to the reduced margins and reduced margins. The only variable that is unknown is the composition of the operating expenses that have increased.

The math you used is correct in showing the change in gross profits but has only minor bearing on the changes in the operating profits. And you definitely cannot take the change to gross profits due to margins and add it to the reduction in revenue and somehow pretend that it represents the change in operating profits.

Regards,
SB

 

[DuckThor Evil]

I can see where you are getting confused. I was talking about operating profits. You are talking only the very basic gross profits (revenue - manufacturing costs) which is almost meaningless and has almost no bearing at all on the the financial numbers that were reported.

You are quite clueless on this issue. Gross profit is one of the most important financial metrics and has all the bearings in the world related to these reported numbers. It has a direct one to one effect on the operating profit figure. It's just you who seems to be unable to understand that.

Revenue from Q1 924.9M
Gross margin 50.3 %

=

Gross profit 463M

minus

operating costs 391M

=

OPERATING PROFIT (463M-391M) = 72M This is it right there!

Add the effect of financing and taxes and we have the reported net income.

= Net income 60 Million.

It's just simple adding and subtracting. Do you now understand how a change in the gross profit figure has a direct 1 to 1 effect in the operating profit figure?

I think we should probably stop here, we're not even remotely talking about the same things. With regards to the operating profits my numbers are quite correct with regards to the reduced margins and reduced margins.

Stopping would be very welcome at this point, but you need to be stopped first. we are talking different things because you are wrong and don't understand how these things work. Your calculation

953.2m - 924.9m = 28.3m

So that 28.3m drop would come directly out of the operating profits

assumes that a change in revenue has 1 to 1 effect to operating profit, but that is incorrect (beyond any measure...) like I already said and should be perfectly obvious. Gross profit however has a 1 to 1 effect to the operating profit though. Revenue figure alone without the gross margin percentage is the one that is somewhat meaningless in this context.

Imagine this: Had the gross margin percentage been 56% instead of 50.1% in Q1 the operating profit would have been higher than in Q4 despite the lower revenue.

924.9M * 56% = gross profit of 518M- 391M = 127M vs 122M in Q4.

How does your "28.3M straight out of operating profit work with that?

The math you used is correct in showing the change in gross profits but has only minor bearing on the changes in the operating profits. And you definitely cannot take the change to gross profits due to margins and add it to the reduction in revenue and somehow pretend that it represents the change in operating profits.

Well I'm glad you at least acknowledged that my math was right. The effect of gross profit I explained...

But what does this:

"And you definitely cannot take the change to gross profits due to margins and add it to the reduction in revenue and somehow pretend that it represents the change in operating profits."

even tries to say?

I assure you my calculations are 100 % correct and by the book.

Like I've said the change in gross profit is not caused by just the change in margins but the change in margins AND the change in revenue. It works exactly like I said and calculated. There is no room for interpretation here.

 

[trinibwoy]

http://www.electroiq.com/articles/sst/2012/05/tight-28nm-supply-shifts-gpu-maker-shares-in-q1.html

Mercury Research’s updated PC Graphics market share forecast for Q1 2012 (“PC Graphics Chip Sets & Technologies,” shows that discrete GPUs reversed trends this quarter -- growing +3% Q/Q while integrated fell -2% Q/Q. This suggests that PC ODM/OEMs can increase spending on graphics now that hard disk drive (HDD) prices are decreasing with supply restored from the Thailand flooding disaster. Despite the strength in the discrete GPU market, limited availability of Nvidia’s Kepler GPU resulted in 90 bps of share loss in the discrete GPU market, with Intel and AMD taking modest share from Nvidia.

AMD lost 30bps of share to NVDA in the mobile discrete market but gained 150 bps in the desktop discrete market benefitting from the earlier ramp of 28nm graphics parts as well as from lower shipments by NVDA due to limited availably of its desktop parts. AMD gained 90bps in the discrete market. In the integrated market, AMD gained modest share in desktops but loss share to Intel on the notebook side resulting in AMD’s share in the integrated market slipping to 17.5% from 18% the prior quarter.

NVDA’s management reported that its FY Q1 results were dampened by 28nm chip shortages. NVDA suggests that this is not a yield issue, Muse says, adding that it is likely due to poor planning on NVDA’s part and reluctance on foundry TSMC’s part to add more capacity. In the future, look for Nvidia to regain that share as 28nm shortages lessen, Kepler sees higher attach rates, and Nvidia fulfills Apple orders. Robust design-in momentum on the Ivy Bridge platform, Ultrabooks, as well as Apple products all point to incremental share gains for NVDA going forward.

 

[UniversalTruth]

Q1 Graphics Shipments Decline 0.8% Over Last Quarter and Slip 3.38% Over Last Year...and that's the good news according to Jon Peddie Research Report

The news was not good. AMD was able to grow shipments over last quarter by 0.3%, in a down quarter. Intel slipped 1.3% and Nvidia declined 4.5% from the last quarter.

Nvidia shipments dropped 4.5% from last quarter, partially due to the phase out of IGPs. The company will no longer report IGP shipments.

Year to year this quarter AMD shipments declined 1.2%, Intel shipped 4.67% more parts, Nvidia slipped -26.3% in the overall market as company withdraws from the integrated segments, and VIA saw their shipments increase by 51% over last year and 148% over last quarter.

Nvidia has exited the integrated graphics chipset segments and it is shifting its focus to discrete GPUs. The company suffered a desktop discrete market share loss (4.3% quarter-to-quarter), and had a 5% gain in notebook discrete GPUs. Nvidia credits strong connect with new Intel Sandy Bridge notebooks for its gains.

Meanwhile

AMD had a gigantic increase in shipments of its desktop APUs of 84% and a modest 2.6% decline in notebook APUs.

 

[Richthofen]

These overall GPU share numbers get more and more uninteresting.

 

[doob]

Well since no one has posted this piece of news i'll add it now since i got nothing better to do atm.

The problem is that the GeForce / Quadro driver from NVIDIA is only available for Linux x86 and x86_64 architectures, not MIPS or even ARM (only the Tegra driver is for ARMv7). NVIDIA refused to release the source-code to their high-performance feature-complete cross-platform driver to the Chinese, and it would cost them millions of dollars to port the code-base, so they went to AMD for their GPU order.

The order was at least for ten million GPUs, which given the current low-end parts, would value the order at least 250 to 350 million dollars (USD). However, I've heard from a separate source that it was closer to the half billion dollar mark. This money will now be handed over to AMD since they have the officially-based open-source driver for their products.