- Record revenue & gross margins (42.5%)
- Would be record profit if you excluded stock-based compensation.
- The nForce division reached record revenues for the 7th consecutive quarter.
CC in about 30 minutes. So, what did I tell you again Geo, and notice how it perfectly fits everything they reported except record revenue which I wasn't sure about?
Summary:
Uttar
- Would be record profit if you excluded stock-based compensation.
- The nForce division reached record revenues for the 7th consecutive quarter.
CC in about 30 minutes. So, what did I tell you again Geo, and notice how it perfectly fits everything they reported except record revenue which I wasn't sure about?
Summary:
Notebook grew by 34%
Desktop grew slightly, seasonally down for the PC industry
Chipset improved less than anticipated, but record still.
Memory & Other also growth $12M.
Quadro nearly quadrupled year-over-year (might not have heard right...)
Introduction and success of new GF7 products contributed
$245M of revenue from GF7 at excellent gross margins.
Excellent margin improvements in handheld.
Operating expenses were higher. Factors:
- Acquisition of Hybrid
- Hiring of a large number of ex-3DLabs employees.
- Employee costs of $4M for compensation if I heard right.
- 200 new employees from ULI, 70 from Hybrid+3DLabs
- Taxrate will go down (cf. congress, R&D law, etc.)
- Net earnings of $0.23 with GAAP, $0.29 otherwise.
- $40M Cash Flow => increase in cash
- All new products are now in full production.
- Increase inventory because of GF7 production.
- Q2 is the most difficult to forecast.
- Seasonally low, visibility is limited.
- Expectations from PCs
- Desktop tends to decline, tends to be offset by growth in other areas.
- Believe we can offset any other decline via MCP and Notebook.
- With the new products, desktop is expected to be flat.
- OVerall, we expect flat revenue. Which means a 35% year-over-year growth since last year had XBox.
- Any margin decline would come from lower-margin business' revenue increasing.
- Relatively flat sales & gross margins expected.
- GAAP Tax Rate likely to be decreased.
--- JEN ---
- blabla about GeForce7, SLI, etc.
- 7 millions SLI MCPs shipped.
- DELL showcased Conroe+nForce5+Quad SLI at E3.
- In the mainstream, we are focusing on share increase (DUUUUH!)
- We had no entry OEM wins last year, now ramping design wins.
- DELL, HP, Samsung, Acer, etc. etc. etc.
- Starting to reflect in segment share.
- Notebook productline achieved record revenue.
- Revenue and share growth expected to continue year-over-year.
- Blabla about Vista and Aeroglass.
- Blabla about (Intel?) IGPs being insufficient for Aeroglass.
- Blabla about HD & BLuray/HD-DVD.
- Won every single Bluray/HD-DVD design win to date.
- AMD Share increasing (36 to 42%)
- Preparing nf5 for both AM2 and Conroe.
- "Will raise the performance bar for the industry".
- Blabla about PS3.
- Expecting another year of strong growth.
----
Q: Congratulations on the quarter. MCP business?
R: First of all, thank you.
Our marketshare of the MCP business was below our expectations too.
We experienced that early in the quarter, there was some obsolete inventory that
was sold by one of our competitors in Asia, and they were extremely low-cost IGP products.
So that reduced demand for low-end MCPs, but increased demand for GPUs because the IGPs were
badly lackluster.
[Q missed]
Q1: Flat/Decline Q2 details?
R: We don't expect a decline in Handset.
Don't know about Memory in Q2, was large in Q1.
If Desktop and Memory don't go down, think we can achieve revenue growth.
Q2: Idea behind making more inventory?
R: Q1 was the inventory transition quarter.
Necessary for OEM pipeline building so they have more flexibility.
[focus is on making sure] "We have enough 7900s and 7600s and 7300s for the marketplace"
Q1: NRA in Q1? And in Q2?
R: $20-25M in Q1. $23M actually. Sony NRE + Licensing together.
Roughly flat expected in Q2.
Q2: Most important drivers in H2 2006?
R: "We always enter Q2 with caution"
"But we have a lot of good things going for us"
"We continue to ramp into the marketplace with GF7"
"We have the benefit this year of winning a lot of the OEM design wins that we didn't have last year"
"So we will be ramping into those design wins"
"Pretty terrific Intel MCPs" (or did I mishear?)
"Pretty wide avaibility of PS3s"
"Opportunity to grow substantially in MCPs"
"With Conroe, it creates a larger performance segment. And we have a large presence there."
"First year with IGPs in both Desktop and Notebooks."
Blabla about BD&HD and GPU Video Decoding importance, cf. old quarters' blabla.
"If we continue to execute, I think we're gonna have a pretty good year."
[Blabla about Inventory, being required to help OEMs fill their pipeline, so transition necessity]
Q: Q2, how is that possible with the transition being this quarter?
R: Blablabla [convincing]
"The demand for 7900s is very high, and for 7600s it's incredibly high" [speaking of OEMs]
Q: MCP business margins etc.?
R: Next-generation nForce5 will be the highest performance corelogic in the world.
Q: Above, below, at corporate level margins?
R: Above... !
Q: What's the composition of the inventory?
R: In general, the growth in inventory was driven by the new products.
Q: Distribution?
R: Two major direct distributors, but not highly significant factor (??? what ???)
Q: Handsets?
R: "Most of our handset design wins are centered around 3G cellphones..."
"Digital television cellphones and smartphones [too]"
"Didn't really play in the 'basic' graphic proposition in handsets"
"Because there's really not much value to add there" (=> margins)
Vision of multimedia blabla.
Q: "Performance mainstream segment", desktop, details? 7600 Products? Strategy?
R: "Our strategy is [unhearable]" (capture it?) [laughter]
High ASPs, High Volume segment => most interesting.
Importance of brand in this segment, because of its intermediary nature.
Q: Delays of Vista. What if it really is pushed even farther?
R: No real change. First major OS upgrade in quite a long time (7 years?)
First to require GPUs. More and more will use GPU-using widgets.
Blabla about awesome it is. Basic idea: It's good as long as it happens.
Q: Congratulations over the great margins. Historically, have you gotten higher performance share-wise?
R: "Our focus really isn't just share".
"We've always been focus on increasing the marketplace and expanding the reach of it."
"One of the best things we ever did was working with Microsoft to talk about the importance of the GPU."
"SLI also increased the expand of GPUs." (SLI) Physics will too.
Q: Workstation business?
R: "We grew slightly and had a record quarter."
Q: MCP, Desktop, Notebook, Handset. Gross margin growth in those segments and in general.
R: [big laughter] "Woah, that was like 6 questions!"
R: Desktop maegins increased because of GF7. Excellent margins.
In workstation, it's already nearly maxed out, very high already.
Notebooks, wsill increase because it'll fully transition to GF7 over time.
MCP should have some gross margin lift. IGPs which they are shipping more of might reduce margins though.
nForce Intel MCP margins are pretty good too. So different markets have different margin directions.
New features (i.e. Conroe/AM2) helps improve margins in general.
Margin improvements comes not only from new products, but also all-around operational improvements.
Q: ATI and Intel claim their IGPs are Vista compatible or will be very soon. You say the opposite. Who's right?
R: Very good question.
On Windows XP, everybody's experience is identical, because the graphics technology required is very low.
With Aeroglass, people with GPUs will have a noticeably better experience. It'd be impossible not to notice it.
Similarity with games (=> "better experience") => Customers could and will feel the difference, good industry dynamic.
---
Q: First of all good quarter. Hybrid+3DFX employee increase details?
R: "Quick clarification, that was 3DLabs".
Cost about $2M in employee costs. Got about 2 months of ULI, less for Hybrid & 3DLabs.
(+ interesting detail abotu ULI revenue/expenses=>income after they bought them)
Q: Physics via GPUs, Hellgate demo?
R: "It'll make the world look a lot more alive."
"Physics is going to be terrific."
"The more objects you create, the more you'll have to render." - "So that creates more workload."
"It's hard to say whether there's a market for discrete physics processors"
"We wish these guys well, but from our point of view [...]" (basically, GPUs are as appropriate if not more)
(and good investment reusage)
Q: The chipset sell-off in Asia - going to happen again?
R: It looked like it was massively below-cost, so it's unlikely to happen regularly, yet alone again.
So the dynamics are likely to become normal again.
Q: Physics via GPU efficiency? [or was it not Physics? Unhearable question/answer]
R: Discrete GPU is specialized, so will do much better than CPUs.
Q: PS3 Royalties etc.?
R: No royalty expectations yet. Q3 will likely be the same as Q2, plus royalty, amounts unknown.
Q: What percentage of GPU sales in the quarter was GF7?
R: More than $250M of revenue in GF7 in the GPU business.
"That was well more than 50%."
"It should be a lot more" [in Q2, relatively]
Q: [some math about expectations, looks aggressive]
R: Obviously, it depends on the market. "GF7 is a very good product family".
Desktop being flat in Q2: expected from ASPs or Share gain, or what? "Share gain."
Q: MCP?
R: "We expect MCP to do better."
"Small correction, I was asked if workstation was a record, and I said so"
"It actually was down by 1%, so basically flat. Not a record quarter thus."
Uttar
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