nVidia is now #2 financially in the graphics world.
- Thread starter digitalwanderer
- Start date
Wow, last time I checked(many months ago 
), the market capitalization of NVDA was about twice the amount of ATYT!
Since the rumor of big N's billion dollar cash is widely spread on the forums, I wonder how much ATi has in bank?
And since NV only has 2 billion of market capitalization, it is really hard to believe that they have 1 billion in cash!! Anyone explain this to me?
), the market capitalization of NVDA was about twice the amount of ATYT! Since the rumor of big N's billion dollar cash is widely spread on the forums, I wonder how much ATi has in bank?
And since NV only has 2 billion of market capitalization, it is really hard to believe that they have 1 billion in cash!!
Anyone explain this to me?http://biz.yahoo.com/p/n/nvda.html
http://biz.yahoo.com/p/A/ATYT.html
Their market cap is always going to include the cash value. If somebody could buy every share, they'd own the cash also, in addition to the business. To me, it appears NVIDIA is undervalued (or ATI is overvalued), when you subtract out the cash component of the market cap, their market cap is ~60% of ATIs, but they and they outsell and out margin ATI. Of course, they're undergoing a severe shortage of financial confidence right now.
I'd expect if their next generation is a hit both with the customers and financially, and the gloominess turns around, then you'd see much more stock growth out of NVIDIA than you would ATI in the near future. (Just going by sales, the market cap of NVIDIA minus the cash should be ~1.5x ATI)
http://biz.yahoo.com/p/A/ATYT.html
Their market cap is always going to include the cash value. If somebody could buy every share, they'd own the cash also, in addition to the business. To me, it appears NVIDIA is undervalued (or ATI is overvalued), when you subtract out the cash component of the market cap, their market cap is ~60% of ATIs, but they and they outsell and out margin ATI. Of course, they're undergoing a severe shortage of financial confidence right now.
I'd expect if their next generation is a hit both with the customers and financially, and the gloominess turns around, then you'd see much more stock growth out of NVIDIA than you would ATI in the near future. (Just going by sales, the market cap of NVIDIA minus the cash should be ~1.5x ATI)
What do you see happening if their next generation is like their last generation and we get more of the same old same old from 'em?RussSchultz said:
You have to look at the whole balance sheet. NV is geared much much higher than ATI - Debt/Equity of 0.32 as opposed to 0.04 for the most recent quarter. Cash is $1bln vs $250mln respectively. Assuming these numbers are all USD, and gearing is based on present market value of equity (not book, or last quarter end level of mkt cap), debt level for NV is about $1bln, and debt level for ATI about $100mln.
Thus both have small levels of "net cash". So small in fact, you can discount it all from the above discussion.
Gnep (your resident accountant).
Thus both have small levels of "net cash". So small in fact, you can discount it all from the above discussion.
Gnep (your resident accountant)
.
IIRC 300M of NV's debt is such that it needs to be paid back in two years.
This is why I should not be in charge of my own financials.Gnep said:You have to look at the whole balance sheet. NV is geared much much higher than ATI - Debt/Equity of 0.32 as opposed to 0.04 for the most recent quarter. Cash is $1bln vs $250mln respectively. Assuming these numbers are all USD, and gearing is based on present market value of equity (not book, or last quarter end level of mkt cap), debt level for NV is about $1bln, and debt level for ATI about $100mln.
Thus both have small levels of "net cash". So small in fact, you can discount it all from the above discussion.
Gnep (your resident accountant)
God bless mutual funds and Morning Star.
DaveBaumann said:
Shouldn't make too much difference. They would be able to refinance with new debt without a problem I would have thought.
In fact looking at the "term" of the current debt for a corporate can be slightly misleading - for example a very large multinational I happen to know the financing of rather well (
) keeps a large proportion of its debt portfolio with a "short" maturity profile of less than 6 months - often less than 30 days. The rest is out between 2 and 5 years ("Medium Term"). Doesn't mean they won't be able to issue more debt as and when the current CP and MTNs mature, to finance the repayments.
Could you please try explaining that again using very little words like you're trying to explain it to a child who's a bit of a thicky?Gnep said:You have to look at the whole balance sheet. NV is geared much much higher than ATI - Debt/Equity of 0.32 as opposed to 0.04 for the most recent quarter. Cash is $1bln vs $250mln respectively. Assuming these numbers are all USD, and gearing is based on present market value of equity (not book, or last quarter end level of mkt cap), debt level for NV is about $1bln, and debt level for ATI about $100mln.
Thus both have small levels of "net cash". So small in fact, you can discount it all from the above discussion.
Gnep (your resident accountant)
I REALLY suck with financial stuff, but I want to understand this.
digitalwanderer said:
I guess this is like you guys trying to explain pixel shaders to me
OK. Look at Russ' links to biz.yahoo. Both ATI and NV have a quoted "debt/equity" number - 0.36 for NV and 0.04 for ATI.
This ratio is the amount of debt they have divided by the equity. In this case I am assuming that "equity" is equal to the market capitalisation (as at now), also found on those pages.
Doing the maths, for example for NV, they have a market capitalisation of $3.07bln. As I said, let's call this equity. So if
Debt/Equity = 0.36
then
Debt = Equity * 0.36 = 3.07 * 0.36 = $1.1bln or so.
Doing the same for ATI gives them a debt level of 2.74*0.04 = $0.1 bln.
Now both companies also have cash (like you might have a loan from the bank, but also cash in your current account at the same time) - so to find the "net" position as at the last quarter (27 Apr for NV and 31 May for ATI - so these numbers are all a bit out of date anyway) - we take the debt from the cash.
So NV has $1.05bln cash, giving them a "net debt" of $50mln.
ATI has $280mln cash, giving them a "net cash" of $180mln or thereabouts.
These numbers are both relatively small compared to the respective market capitalisations, and so IMHO all the discussion regarding "cash piles" and whether you should take them off mkt cap or not is rather academic.
Please don't draw any direct conclusions from these net figures I have calculated either, as there are some rather crass assumptions in there, and anyway the "real" position depends a lot on the precise financial structure of these companies, of which I know very little. Also it is remarkably easy to manipulate debt and cash levels for the quarter end balance sheet date (it's a lot harder to actually do it right though) - you might have 200mln cash the day before q/e, 50mln cash on q/e, and 200mln again the day after. And the 50 is the only number that you would put in your balance sheet. Of course in no way am I suggesting that either NV or ATI are doing any sort of "balance sheet manipulation". Seriously I'm not.
Gnep
Thanks! It's all clear as mud to me now.Gnep said:digitalwanderer said:
I guess this is like you guys trying to explain pixel shaders to me
OK. Look at Russ' links to biz.yahoo. Both ATI and NV have a quoted "debt/equity" number - 0.36 for NV and 0.04 for ATI.
This ratio is the amount of debt they have divided by the equity. In this case I am assuming that "equity" is equal to the market capitalisation (as at now), also found on those pages.
Doing the maths, for example for NV, they have a market capitalisation of $3.07bln. As I said, let's call this equity. So if
Debt/Equity = 0.36
then
Debt = Equity * 0.36 = 3.07 * 0.36 = $1.1bln or so.
Doing the same for ATI gives them a debt level of 2.74*0.04 = $0.1 bln.
Now both companies also have cash (like you might have a loan from the bank, but also cash in your current account at the same time) - so to find the "net" position as at the last quarter (27 Apr for NV and 31 May for ATI - so these numbers are all a bit out of date anyway) - we take the debt from the cash.
So NV has $1.05bln cash, giving them a "net debt" of $50mln.
ATI has $280mln cash, giving them a "net cash" of $180mln or thereabouts.
These numbers are both relatively small compared to the respective market capitalisations, and so IMHO all the discussion regarding "cash piles" and whether you should take them off mkt cap or not is rather academic.
Please don't draw any direct conclusions from these net figures I have calculated either, as there are some rather crass assumptions in there, and anyway the "real" position depends a lot on the precise financial structure of these companies, of which I know very little. Also it is remarkably easy to manipulate debt and cash levels for the quarter end balance sheet date (it's a lot harder to actually do it right though) - you might have 200mln cash the day before q/e, 50mln cash on q/e, and 200mln again the day after. And the 50 is the only number that you would put in your balance sheet. Of course in no way am I suggesting that either NV or ATI are doing any sort of "balance sheet manipulation". Seriously I'm not.
Gnep
(I don't get pixel shaders either, although I'm trying. )One quick-n-easy question on Debt/Equity, is a lower number better or a higher number?
Also, I read someone yesterday who said something about nVidia's market capital being 115x earnings or some such and that it was a bubble waiting to burst, is that sort of accurate or make any sense?
(BTW-Thanks for taking all the time to explain it even though I'm having troubles understanding it.
)digitalwanderer said:Thanks! It's all clear as mud to me now.
One quick-n-easy question on Debt/Equity, is a lower number better or a higher number?
Also, I read someone yesterday who said something about nVidia's market capital being 115x earnings or some such and that it was a bubble waiting to burst, is that sort of accurate or make any sense?
(BTW-Thanks for taking all the time to explain it even though I'm having troubles understanding it.
Debt/Equity - lower means less debt as a percentage of equity
. The "correct" level of debt for a particular company in a particular industry is a whole other debate that I don't really want to start here...As to the earnings multiples, well who knows eh? If we did, we'd all be millionaires (or, more correctly, none of us would, not even Mr Buffet).
I could see in some contexts you could interpret the current market valuation of NV as expecting great things in the future, and those expectations as being overly optimistic.
Or you could say that the weighted average opinion of all NV equity investors (and potential investors) has a certain optimism to it, but that optimism is warranted.
And no, I'm not going to explain that one any further...
The Dig goes demalion style....
Thanks Gnep, very much appreciated knowledge.
So ATi at .04 is better than nVidia at .36, ATi owes less in comparison to what it makes....right?Gnep said:digitalwanderer said:Thanks! It's all clear as mud to me now.
One quick-n-easy question on Debt/Equity, is a lower number better or a higher number?
Also, I read someone yesterday who said something about nVidia's market capital being 115x earnings or some such and that it was a bubble waiting to burst, is that sort of accurate or make any sense?
(BTW-Thanks for taking all the time to explain it even though I'm having troubles understanding it.
Debt/Equity - lower means less debt as a percentage of equity
Ok, I won't worry so much about that one then.
I think I get exactly what you're not saying there, thank you!I could see in some contexts you could interpret the current market valuation of NV as expecting great things in the future, and those expectations as being overly optimistic.
Or you could say that the weighted average opinion of all NV equity investors (and potential investors) has a certain optimism to it, but that optimism is warranted.
Not a problem, I really do appreciate you taking the time to explain it as much as you have. I can understand how professionals in finance ain't exactly allowed to speculate about some things the way that us clueless types can.And no, I'm not going to explain that one any further...
Thanks Gnep, very much appreciated knowledge.
Joe DeFuria
Legend
digitalwanderer said:
No, ATI's 0.04 relative to nVidia's 0.36, means that ATI owes less in comparison to the "cash" it has in the bank.
I might owe $5000 in credit card debit, and have $5000 in cash the bank. My debt/equity ratio is 1.0 ... and it doesn't matter if I make $10/year, or $100,000 a year.
As Gnep was saying, a debt/equity ratio isn't good or bad all by itself. The "best" ratio for one company can be different than for another company.
As a general rule, I would say a higher debt/equity ratio carrys with it more risk...but then more risk typically brings with it a potential for higher rewards.
Ah! Thanks, I actually get it now.Joe DeFuria said:
So what you're all also trying to stress is that there really isn't any one good meter to measure a companies financial picture with, it's the weighing and balancing of several numbers and factors.
Hmmm...must be why them financial types make all the big bucks.
Joe DeFuria said:
Sorry Joe, I agree with the rest of your post, but this bit is a little off. The "Equity" in the D/E ratio is not the "cash in the bank".
It is the value of the shareholders' equity in the company - now this might be the book value (how much these shares are worth on a company's balance sheet), or the market value (the market capitalisation, which is what I have assumed here, having nothing better to go on). It is not the cash they have.
Unfortunately drawing a comparison with an individual here is difficult - we don't have "equity" (although we might well have debt...
). The nearest to a market capitalisation we might have is the net present value of all our future earnings less all our future necessary living expenditure. But the analogy breaks down even there, as we don't pay dividends to anyone (unless you count kids )...Otherwise, spot on...
Nothing is ever easy or simple when you get down to the nitty-gritty details, everything is bloody holistic.Gnep said:digitalwanderer said:
digitalwanderer, you have it 100% correct with that statement. Spot on.
Are you allowed to give an opinion on which company you think is bigger or in a better financial position now, or is that against professional ethics or something?
digitalwanderer said:Are you allowed to give an opinion on which company you think is bigger or in a better financial position now, or is that against professional ethics or something?
Absolutely I'm allowed, because I'm not a regulated analyst.
I won't, though, because I am pleading "not enough information" and besides it's a Saturday and I look through enough numbers during the week
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