JHH
- Must balance OpEx and R&D. Have plans to reduce it noticeably by the end of Q2.
- [List of Innovations]
- Shipped Tesla for revenue this year.
- [CUDA/Tesla Marketing]
- [Ion Marketing]
- [Tegra] - designed in PMPs/PNDs/Smartphones/Mobile Internet Computers. Revenue ramping in the second half.
Marv
- [See PR]
- Weakness across the board. GPU down 47%, Pro down 44%, MCP down 51%.
- Desktop 'only' down 34%, regained share but high-end still very soft.
- All of this was related to the environment of channel inventory.
- We believe channel inventory is down to slightly less than one month, down from roughly three months.
- 29.4% gross margins from a GAAP basis. New inventory reserves of more than $40M, 4-5x more than normal.
- This cost us 10% gross margins, would have still declined otherwise but more associated to change of mix.
- [Insurance stuff wrt packaging problems]
- Put on hold campus construction, one-time charge. Without this, OpEx would have been below guidance.
- Headcount: 5420 (not sure I heard right?) - only critical positions being filled.
- [Tax & Net Income Stuff]
- On the balance sheet, cash is at $1.26B. This is down $49M from Q3, operations only used $20M in cash.
- Receivable appear in good shape.
- Lot of inventory, but still good, so simply drastically reduced manufacturing demands.
- We have a focus on reducing Capex and want it to be less than amortization on a quarterly basis.
- Outlook: Almost impossible to give a reasonable forecast in this environment.
Very wrong last time. In retrospect, October was the last good month and wasn't in the quarter.
We do not see further declines in revenue given the channel situation.
Overall, we expect flat to slightly up revenue. Margins to go back to the mid-30s.
Normally, Q1 has higher OpEx (given less time off etc.) but [missed] so should be roughly flat.
JHH
- [GPU Marketing]
Q&A
Q: Why so confident about your revenue guidance?
A: We track sell-outs rigorously in the market place.
And you heard this by nearly every computer company in the world... End-markets fine in October, November fell off a cliff.
End-markets improved slightly since then [...] So we have a pretty good sense of inventory levels.
"There are a lot of people in the world who don't know what they don't know right now."
[...]
Q: How much is it units, how much is it specs and ASPs?
And the longer the downturn, what's the risk with IGPs being long enough by the
A: ASPs were generally flat this quarter. From that you could argue people aren't buying down per-se.
But netbook phenomenom. No GPU exposure in low-mid and low-end. We still netbooks to cannibalize mid-range.
[Ion Marketing]
High-end will survive, plenty of reasons for performance, but the mid-range could definitely become a very large low-end.
Q: What are you assuming wrt the environment?
A: If you just assume the market didn't get any better, our revenue has to go up, because channel inventory went down last quarter.
From 2.5-3 months to 1-1.5 months. [...] We have more 65nm than I thought given the lower revenue, but still mostly 55nm.
Q: 140 days for inventory, where does that go next quarter? Margins going forward? OpEx planning dynamics?
A: Significantly cut back wafer starts. So significant reduction in Q1. Going forward, should last into Q2 & Q3 before we replenish.
$35M OpEx reduction is what we can do without killing future revenue. Would still not break even, issue is when revenue recovers.
Second half of this year, we have areas of growth we are quite confident about. Tegra will ship towards the second half.
Tesla continues to ramp. Ion should contribute greatly going forward. [...]
Q: 40nm?
A: We have really fabulous products in the market place today, we don't announce future products.
Q: Margins for new market segments? Gaming platform comments?
A: Tesla accretive, Tegra not a drag, Ion in the mid-30s.
Sony royalties is based on their unit production. They're projecting much lower production in Q1 than Q4.
Q: On Ion, what does the ramp look like?
A: I don't know. We have notebook projects happening all over the world. Lots of unknowns.
Design wins launch every quarter, hopefully fully ramped up for Q3/Q4.
[...]
Q: OpEx, is it broad-based?
A: Executives took the largest cut, but almost all of our employees will make contributions. Travel reductions, etc.
[...]
A: There is nothing we are experiencing right now that is seasonal. [continue to invest/innovate/...]
Q: How close are we to competing for the next generation of game consoles?
A: It makes no sense to comment on rumours. It would also be terrible to comment on future products of our customers.
[...]
Q: Workstation business?
A: It took a precipitous decline, was surprising. Thought if there was a safe haven, that was it. Continued weakness.
[...]
Q: Positioning of Ion with Intel supporting 720p in the future?
A: [Ion Marketing]
[...]
[Several questions that aren't all that interesting to be honest]
Am I being too cynical?
