NVIDIA Q3: Not as good as it looks.

[Arun]

http://www.nvidia.com/object/IO_9437.html

Net income for the third quarter of fiscal 2004 was $6.4 million, or $0.04 per diluted share, compared to a net loss of $48.6 million, or $0.32 per diluted share, for the third quarter of fiscal 2003.

Doesn't look too bad, until you realize that this loss included a $60M+ one-time charge regarding that stock exchange program NVIDIA did for employees.
So, since revenue is also significantly up, that means their margins are simply, well... awful.

BTW, I loved this quote

"The full potential of our GeForceâ„¢ FX architecture is just being realized and is propelling our momentum and leadership across all of our products." Mr. Huang added

Uttar

P.S.: Yeah, this isn't fascinating, but since I noticed there wasn't any thread, and I generally like such a thread to exist...

 

[Evildeus]

There's also a one time charge of 16.6 Millions $, so it's not as bad as you think . So the net income is around 23 millions $ compared to 13,2 millions, and i think that the marge... goes up from 3.06% to 4.73%

The financial results for the third quarter of fiscal 2004 included a charge to operating expense of $3.5 million for the write-off of in-process research and development that resulted from NVIDIA's acquisition of MediaQ, Inc. in August 2003, and a charge of $13.1 million to other expense related to the full redemption of NVIDIA's $300 million of 4 3/4% Convertible Subordinated Notes in October 2003.

 

[Dave Baumann]

Interesting. They were full of praise of IBM in the CC, and yet the day after this report turns up on Digitimes:

In addition, TSMC and UMC can output 20% more good die than IBM on each 8-inch wafer during actual production and are more capable of mass production on 12-inch wafers, sources added.

According to sources, Xilinx will not consider to input a large volume of wafers at IBM unless UMC becomes short in capacity. Xilinx currently has outsourced almost all of its 0.13-micron and 90nm FPGA production orders to UMC. The US-based FPGA maker has also pushed the 0.13- and 0.15-micron technologies to be its mainstream production process at UMC.

Nvidia, on the other hand, plans to produce some of its NV36 graphics chips at TSMC’s 12-inch fab, said sources. Nvidia’s NV36 graphics chip is developed at IBM’s 12-inch East Fishkill fab, with mass production slated to begin in November.

 

[chavvdarrr]

Near a week ago I had friendly talk with one of main economists of the firm where I work. The topic went to how understand if any company is "in good health"
"bigger profits, better company" was my first thought ...
"ha!" was the answer - " and I say that good company always tries to be at minimum profit - 'hiding' as much as possible from taxes - but investing in its growth"

Well, maybe NV has very clever economists? , although I doubt that is the reason...

 

[Evildeus]

Well, it also depends on what investors think of the company. Sure hiding profits is a good thing, but the CEO must find a way to inform the investors on these profits hindings otherwise...

 

[nelg]

Interesting. They were full of praise of IBM in the CC, and yet the day after this report turns up on Digitimes:

In addition, TSMC and UMC can output 20% more good die than IBM on each 8-inch wafer during actual production and are more capable of mass production on 12-inch wafers, sources added.

According to sources, Xilinx will not consider to input a large volume of wafers at IBM unless UMC becomes short in capacity. Xilinx currently has outsourced almost all of its 0.13-micron and 90nm FPGA production orders to UMC. The US-based FPGA maker has also pushed the 0.13- and 0.15-micron technologies to be its mainstream production process at UMC.

Nvidia, on the other hand, plans to produce some of its NV36 graphics chips at TSMC’s 12-inch fab, said sources. Nvidia’s NV36 graphics chip is developed at IBM’s 12-inch East Fishkill fab, with mass production slated to begin in November.

Dosen't nV only pay per good chip, not per wafer, with IBM? If so that would make it IBM's problem.

 

[epicstruggle]

I just sold my NV stock. It went up 20% just today. I must say that anyone who thought NV wasnt going to bounce back,(at least in their stock price) is a bit slow in the head.

Now time to wait for the correction to get back into the market.

later,
epic

 

[Arun]

There's also a one time charge of 16.6 Millions $, so it's not as bad as you think . So the net income is around 23 millions $ compared to 13,2 millions, and i think that the marge... goes up from 3.06% to 4.73%

The financial results for the third quarter of fiscal 2004 included a charge to operating expense of $3.5 million for the write-off of in-process research and development that resulted from NVIDIA's acquisition of MediaQ, Inc. in August 2003, and a charge of $13.1 million to other expense related to the full redemption of NVIDIA's $300 million of 4 3/4% Convertible Subordinated Notes in October 2003.

Hehe, very good point!

Still, compared to even Q4 2002, it's not a particularly glorious achievement.
And certainly still not as good as 0.04 vs -0.32 seems to be at first sight

epicstruggle: agreed. Getting back to $40-70 is a very different story, though IMO I pity whoever bought NVIDIA stock at these levels and still got it today.


Uttar

 

[epicstruggle]

Hehe, very good point!

Still, compared to even Q4 2002, it's not a particularly glorious achievement.
And certainly still not as good as 0.04 vs -0.32 seems to be at first sight

epicstruggle: agreed. Getting back to $40-70 is a very different story, though IMO I pity whoever bought NVIDIA stock at these levels and still got it today.


Uttar

Yeah i feel sorry for those people who invested in the bubble. Im extremely happy to see both nv and ati diversify from the pure graphics card business.

later,
epic

 

[Johnny Rotten]

There's also a one time charge of 16.6 Millions $, so it's not as bad as you think . So the net income is around 23 millions $ compared to 13,2 millions, and i think that the marge... goes up from 3.06% to 4.73%

The financial results for the third quarter of fiscal 2004 included a charge to operating expense of $3.5 million for the write-off of in-process research and development that resulted from NVIDIA's acquisition of MediaQ, Inc. in August 2003, and a charge of $13.1 million to other expense related to the full redemption of NVIDIA's $300 million of 4 3/4% Convertible Subordinated Notes in October 2003.

Hehe, very good point!

Still, compared to even Q4 2002, it's not a particularly glorious achievement.
And certainly still not as good as 0.04 vs -0.32 seems to be at first sight

epicstruggle: agreed. Getting back to $40-70 is a very different story, though IMO I pity whoever bought NVIDIA stock at these levels and still got it today.


Uttar

There was at least one split in there though....

 

[cthellis42]

X-bit labs has a deeper analysis with more ooey-gooey numbers to look at.

 

[Arun]

There was at least one split in there though....

And I'm sorry to announce you there wasn't
Without splits, I'd have had to say $140

Chtellis: Regarding that XBit article: That's Q2 2003, not Q3, as currently being talked about


Uttar

 

[cthellis42]

D'oh. Damn my eyes! I was certainly SEARCHING for "third" on Google, but it seems to have aligned on the single mention of the word under "third quarter expectations". Bleh...

Oh well. Still numbers I hadn't seen before, and are good to know. <chuckles> With luck they'll do something similar for third quarter.

 

[radar1200gs]

This is on nV news front page.
http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=3773174

NV Stocks Healthy - 11/07/03 @ 9:42 am - By: MUYA - Source: E-Mail
After posting increased revenue earnings, NVDA stocks have jumped 7.4% according to Reuters.
Graphics chip designer Nvidia Corp. (NVDA.O: Quote, Profile, Research) said on Thursday it swung to a quarterly net profit as revenue rose a stronger-than-expected 13 percent and that current-quarter sales will be above Wall Street's average estimate on strong growth across its product line.

Shares in Nvidia jumped 7.4 percent in after-market trade following its quarterly results and outlook, helped by confident statements by the company's chief executive.


ATI shares however went down after ATI"s chairman announced he would sell 1 million of his shares.
Shares of ATI Technologies Inc. (ATY.TO: Quote, Profile, Research) (ATYT.O: Quote, Profile, Research) fell almost 5 percent on Wednesday morning after the company's president said he would sell up to a million shares of the graphics chips manufacturer, depending on market conditions.

ATI shares were down 62 cents at $14.31 on Nasdaq, and were down 87 cents at C$19.08 in Toronto

 

[Arun]

Actually 7.4% is post-market. The interesting number is they had a +20% boost on Friday ( that 20% includes the 7.4% )
Still, I must admit that without that nV News post, I wouldn't even have realized these results were published, even though I was looking foward to them,


Uttar

This is on nV news front page.
http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=3773174

NV Stocks Healthy - 11/07/03 @ 9:42 am - By: MUYA - Source: E-Mail
After posting increased revenue earnings, NVDA stocks have jumped 7.4% according to Reuters.
Graphics chip designer Nvidia Corp. (NVDA.O: Quote, Profile, Research) said on Thursday it swung to a quarterly net profit as revenue rose a stronger-than-expected 13 percent and that current-quarter sales will be above Wall Street's average estimate on strong growth across its product line.

Shares in Nvidia jumped 7.4 percent in after-market trade following its quarterly results and outlook, helped by confident statements by the company's chief executive.


ATI shares however went down after ATI"s chairman announced he would sell 1 million of his shares.
Shares of ATI Technologies Inc. (ATY.TO: Quote, Profile, Research) (ATYT.O: Quote, Profile, Research) fell almost 5 percent on Wednesday morning after the company's president said he would sell up to a million shares of the graphics chips manufacturer, depending on market conditions.

ATI shares were down 62 cents at $14.31 on Nasdaq, and were down 87 cents at C$19.08 in Toronto

 

[FUDie]

Some things I found interesting comparing Q2 2004 to Q3 2004:

                    Q2          Q3
--------------------------------------
revenue        $460 mil      $486 mil
cost of rev.   $330 mil      $352 mil
gross margin    28.2%         27.6%
cash          $1012 mil      $612 mil
accts rec.     $190 mil      $158 mil
inventory      $218 mil      $261 mil
accts pay.     $282 mil      $242 mil
accr. liab.    $183 mil      $187 mil

Given that NVIDIA has roughly 173 million shares outstanding, it would only take delaying payment of a $1.7 million bill to inflate earnings by $0.01/share. Also, inventories have increased dramatically (19%). It seems like a pretty serious liability to have ~$90 mil more in accounts payable than accounts receivable.

Lastly, it's known that NVIDIA paid of $300 million in debt, so that would affect their cash position, yet their cash has decreased by about $100 mil more than that. I guess some of that went into the inventory (~$43 mil), but what about the rest? Maybe the difference in the gross margin?

-FUDie

 

[cthellis42]

Woo-hoo! Pseudo-redemption, as indeed X-bit labs provides another report... this time on the one I wanted to find in the first place!

Too long to quote directly, so interested parties will just have to travel to their site. (Poor you.)

 

[Pete]

The officials from NVIDIA confirmed a “whole-newâ€￾ NV4x family to be launched next year (probably, calendar year, editor) and bring “programmable shading and cinematic computing to a new levelâ€￾.

A playable one?