nVidia is now #2 financially in the graphics world.
- Thread starter digitalwanderer
- Start date
Yeah, but unfortunately I generally feel the same way in those discussions too...Gnep said:I feel the same way when reading the more technical 3d discussions
bunkerbuster
Newcomer
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 had to check this out for myself, because I was a little skeptical. After some digging, I found the D/E ratio to be something like this:
Debt Ratio= Long Term Debt / Total Shareholder's Equity
Look at both of their balance sheets and this seems to check out. It doesn't have anything to do with Market Cap, it's do with the equity in the hands of shareholders within the company...and that equity is in the form of retained earnings, capital surplus, common & preferred shares, treasuries, options etc...whatever the hell that means.
http://biz.yahoo.com/fin/l/n/nvda_qb.html
http://www.ati.com/companyinfo/ir/2003/atiq303.pdf
So "net cash" can be worked out like this:
(Cash + Short term investments) - Long Term Debt
ATI = (235 + 49) - 28 = 255 million
Nvidia = (278+771) - 305 = 744 million
Question-o-clarification?bunkerbuster said:
What is the 49 & 771 million actually representative of for both companies? What kind of short term investments are we talking about?
bunker - quite right.
The problem with D/E is that there are many (equally valid) definitions of both D & E... and as I wasn't sure what biz.yahoo were using (and was being too lazy to find out), I made an assumption and used a number for E that was conveniently to hand
More fully,
Equity can be:
- Book (shareholders') equity
- Market Capitalisation
Debt could be:
- long term debt only
- long term debt plus short term debt
- either of the above plus certain "off-balance sheet items" such as operating leases duly capitalised, tolling contracts, pensions obligations etc.
- any of the above less cash
- any of the above less cash and ST securities.
But with your extra link supplied, (which I was too lazy to find), we have your numbers. As digi asks though, I would be a little hesitant to include ST investments - especially as any money market, highly liquid investments made by the treasury function in the firms, will be counted as "cash equivalents".
Still my conclusion would be: unless it's your job, don't bother looking at the numbers If a company is in financial trouble, either you will hear about it from elsewhere, or you wouldn't have spotted it yourself Besides, numbers and accountancy are boring!
The problem with D/E is that there are many (equally valid) definitions of both D & E... and as I wasn't sure what biz.yahoo were using (and was being too lazy to find out), I made an assumption and used a number for E that was conveniently to hand
More fully,
Equity can be:
- Book (shareholders') equity
- Market Capitalisation
Debt could be:
- long term debt only
- long term debt plus short term debt
- either of the above plus certain "off-balance sheet items" such as operating leases duly capitalised, tolling contracts, pensions obligations etc.
- any of the above less cash
- any of the above less cash and ST securities.
But with your extra link supplied, (which I was too lazy to find), we have your numbers. As digi asks though, I would be a little hesitant to include ST investments - especially as any money market, highly liquid investments made by the treasury function in the firms, will be counted as "cash equivalents".
Still my conclusion would be: unless it's your job, don't bother looking at the numbers
If a company is in financial trouble, either you will hear about it from elsewhere, or you wouldn't have spotted it yourself Besides, numbers and accountancy are boring!
Ok, I'm all confused but like it when y'all agree with me.tamattack said:
The only reason I'm a bit hesitant to accept those "future investment" numbers at face value is I believe that's how Enron was cooking the hell out of their books and it seems like the best place to fudge-the-hell out of your numbers. (Oh yeah, I was an office manager for a construction firm for a couple of seven years or so and ran all the books so I guess I do have a tiny little accounting experience...but mainly just accts rec/pay, payroll, checkbook and such. Quarterly reports and taxes we sent out to our accountants.
)bunkerbuster
Newcomer
Gnep said:bunker - quite right.
The problem with D/E is that there are many (equally valid) definitions of both D & E... and as I wasn't sure what biz.yahoo were using (and was being too lazy to find out), I made an assumption and used a number for E that was conveniently to hand
Yes I knew you were being hypothetical in trying to explain to the folks the general concept. Just had me a bit confused with that market cap thing. For instance, I punched General Electric's (GE) numbers into the equation and came up with +$1 trillion in debt. I couldn't figure out how they were surviving...lol.
bunkerbuster
Newcomer
tamattack said:
I agree it seems a bit dubious to just look at one thing and call it their "Debt", but apparently that's what yahoo is doing. I guess it should be regarded more as an apples to apples type reference for screening stocks, than an accurate depection of their debt.
I think a little summary/clarification of terminolgy is due:
Debt to Equity has nothing to do with market cap. It is simply based on accounting figures (book value and total debt).
Market capitalization is what the market (you and me and fundmanagers etc. as a group) values the company at. Set by supply and demand. It is the stock market price times the number of outstanding shares.
In theory, a company's value (market cap) should be the total of all expected future profits, adjusted for expected future inflation. A lot of expectations, so naturally garbage in and garbabe out applies. Right now the market expects (slightly) higher future profits from ATI.
PE is a multiple derived from price over earnings. A high PE means that the market EXPECTS higher earnings in the future. Failure to meet this will result in stock price drop. In essence this is like betting on the favorite at the horse races. Good future financial news is priced into the stock.
In essence this is a game of outguessing. To make excess stock market returns, one needs to determine not which company will perform better, but which one will perform better than expectations. This naturally depends on many many factors, most of which are outside of our control, and of our ability to predict. Of course some very smart people with some very good sources of information (such as frequent sales channel checks) are able to "beat the market". Likewise, very smart people with lots of good information lose bucket loads of money. For example, a lot of people bet the farm on 3dfx because they thought that Glide would give a proprietary monoplistic advantage. Suckas.
And of course, one should note that even though ATI and Nvidia are in competition, investmentwise there are many factors that help or hurt both companies (PC sales etc.). Their fortunes are joined to the health of the PC and tech industry, so one's problems is not necessarily the other ones fortune.
Debt to Equity has nothing to do with market cap. It is simply based on accounting figures (book value and total debt).
Market capitalization is what the market (you and me and fundmanagers etc. as a group) values the company at. Set by supply and demand. It is the stock market price times the number of outstanding shares.
In theory, a company's value (market cap) should be the total of all expected future profits, adjusted for expected future inflation. A lot of expectations, so naturally garbage in and garbabe out applies. Right now the market expects (slightly) higher future profits from ATI.
PE is a multiple derived from price over earnings. A high PE means that the market EXPECTS higher earnings in the future. Failure to meet this will result in stock price drop. In essence this is like betting on the favorite at the horse races. Good future financial news is priced into the stock.
In essence this is a game of outguessing. To make excess stock market returns, one needs to determine not which company will perform better, but which one will perform better than expectations. This naturally depends on many many factors, most of which are outside of our control, and of our ability to predict. Of course some very smart people with some very good sources of information (such as frequent sales channel checks) are able to "beat the market". Likewise, very smart people with lots of good information lose bucket loads of money. For example, a lot of people bet the farm on 3dfx because they thought that Glide would give a proprietary monoplistic advantage. Suckas.
And of course, one should note that even though ATI and Nvidia are in competition, investmentwise there are many factors that help or hurt both companies (PC sales etc.). Their fortunes are joined to the health of the PC and tech industry, so one's problems is not necessarily the other ones fortune.
Also in regards to debt equity, low is not necessarily better than high, and vice versa.
It refers to the amount of leverage in the company.
For example, imagine that you have $10 000 cash to invest and have two options:
1) Invest it in the stock market.
2) Put the $10 000 down, borrow $90 000 from the bank. Invest all $100 000 in the stock market.
Which is better? Depends. 1) Is safer, but 2) has the potential to earn much more money. There is a tradeoff here.
Companies try to leverage themselves so that they can earn higher returns without risking getting into trouble (bankruptcy). Too low and you are foregoing returns, too high and you are risking it all. Each industry and company has its own optimal point, and as always this is a subjective call based on many unknowns.
It refers to the amount of leverage in the company.
For example, imagine that you have $10 000 cash to invest and have two options:
1) Invest it in the stock market.
2) Put the $10 000 down, borrow $90 000 from the bank. Invest all $100 000 in the stock market.
Which is better? Depends. 1) Is safer, but 2) has the potential to earn much more money. There is a tradeoff here.
Companies try to leverage themselves so that they can earn higher returns without risking getting into trouble (bankruptcy). Too low and you are foregoing returns, too high and you are risking it all. Each industry and company has its own optimal point, and as always this is a subjective call based on many unknowns.
digitalwanderer said:Aw, don't listen to Russ OpenGL guy...we all know the real score!OpenGL guy said:
ATI IS NUMBER ONE!!!!
ATI IS NUMBER ONE!!!!
ATI IS NUMBER ONE!!!!
(Sorry, I'll stop now.
Good luck with ATYT. Let's see what happens when their CEO is finally indicted over the insider trading charge.
Bouncing Zabaglione Bros.
Legend
above3d said:Good luck with ATYT. Let's see what happens when their CEO is finally indicted over the insider trading charge.
Like Nvidia before it, they'll probably just pay a fine for screwing up their books and move on.
He'll probably survive at least, unlike nVidia's once the stockholders get hold of him and lynch him up....above3d said:Good luck with ATYT. Let's see what happens when their CEO is finally indicted over the insider trading charge.
Similar threads
