Nvidia shares slump on weak PS3 demand
- Thread starter Rangers
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It's a driver for margins, but arguably not even the primary one. The quality of semiconductor analysts is just depressing nowadays, heh 
BTW, the amount of revenue from royalties NVIDIA got from Sony in Q4 can be approximated from the results published by Sony this morning. 1.84M units shipped in Calendar 2006, and NV gets the revenue from all shipping units at the end of each month. So, unless there's a delay I forgot about, that's definitely the number to take into consideration here. As for how much per unit, I think the rumors are $5-7, so saying $6 of pure profit per PS3 is still about $11M - not too shabby.
Uttar
BTW, the amount of revenue from royalties NVIDIA got from Sony in Q4 can be approximated from the results published by Sony this morning. 1.84M units shipped in Calendar 2006, and NV gets the revenue from all shipping units at the end of each month. So, unless there's a delay I forgot about, that's definitely the number to take into consideration here. As for how much per unit, I think the rumors are $5-7, so saying $6 of pure profit per PS3 is still about $11M - not too shabby.
Uttar
I dunno. I think if you consider the key word in that sentence to be "expansion", it's not all that unreasonable a thing to be saying.
geekcomputing
Newcomer
doh
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geekcomputing
Newcomer
I've been investing and following nvidia for years.
gross margins on the psx3 are high (probably near 100 if i had to guess or at least over 80% since the work is over and done with)
I would agree that it is a primary growth driver if your talking about it affecting gross margins. (think of it in grade school terms.. your scoring C's on every test and then you slap on a big fat 100% A+, it really boosts your average)
If your talking about revenue then no.. its not a growth driver.
in the 2006 10-k form filed at the sec nvidia has stated they expect to make in REVENUE 50 - 100 million PER YEAR from the psx3 deal.
divide that into quarters and you get a mere 12.5 million to 25 million per quarter.
Thats a very small amount for a company thats as large as nvidia.
Wall street has some kind of sick obsession w/ nvidas gross margins. Needless to say its probably going to go down a little once the intergrated motherboards hit. Portal player should help it though.
so if the sell off is psx3 related then its an overreaction.
(speaking of dumb analysts ive seen a few that think nvidia gets 129 bucks per psx3 sold.. ok
2 million units x 129 = Y (now take Y and times it by 4 , as in 4 quarters and you get some really really stupid numbers)
gross margins on the psx3 are high (probably near 100 if i had to guess or at least over 80% since the work is over and done with)
I would agree that it is a primary growth driver if your talking about it affecting gross margins. (think of it in grade school terms.. your scoring C's on every test and then you slap on a big fat 100% A+, it really boosts your average)
If your talking about revenue then no.. its not a growth driver.
in the 2006 10-k form filed at the sec nvidia has stated they expect to make in REVENUE 50 - 100 million PER YEAR from the psx3 deal.
divide that into quarters and you get a mere 12.5 million to 25 million per quarter.
Thats a very small amount for a company thats as large as nvidia.
Wall street has some kind of sick obsession w/ nvidas gross margins. Needless to say its probably going to go down a little once the intergrated motherboards hit. Portal player should help it though.
so if the sell off is psx3 related then its an overreaction.
(speaking of dumb analysts ive seen a few that think nvidia gets 129 bucks per psx3 sold.. ok
2 million units x 129 = Y (now take Y and times it by 4 , as in 4 quarters and you get some really really stupid numbers)
NV's gross margins have been very high (over 40%) for some time, and they've continued to say that they believe they can go even higher. . .and have mentioned 45% as not out of reach. I think that's the context the analyst was talking about in referring to an "expansion" of NV's gross margins being tied to the very, very high gross margins of RSX.
Tho I'd have to do some math to figure out how many RSX they'd have to sell in one quarter to move the companies gross margins even 1%. I suspect it's an unreasonable number.
Tho I'd have to do some math to figure out how many RSX they'd have to sell in one quarter to move the companies gross margins even 1%. I suspect it's an unreasonable number.
geekcomputing
Newcomer
nvidia projected 50 to 100 million per year (revenue)in the march 06 10-k form on page 17 if i remember right.
so thats 12.5 million to 25 million per quarter.
taking uttars figures of 6 bucks x 2 million consoles = 12 million. So i think their figures are very conservative.
Once the price of the psx3 comes down and some hit games come out sales should increase. The europe launch in march should also help.
uttar.. i send you a Pm about another post you made. I have a question. Thanks.
so thats 12.5 million to 25 million per quarter.
taking uttars figures of 6 bucks x 2 million consoles = 12 million. So i think their figures are very conservative.
Once the price of the psx3 comes down and some hit games come out sales should increase. The europe launch in march should also help.
uttar.. i send you a Pm about another post you made. I have a question. Thanks.
Does microsoft pay ATI a royalty on Xenos like this or is Sony just getting hosed?
I thought I read somewhere that the console makers (now, excluding the awful ms/Nvidia royalty model that helped lead to billions in losses) just pay a couple hundred million fee for the designs and that's about it. Really a relative pittance, was the impression.
And if ms pays ATI the same way, shouldn't their financial results be better? After all a lot more 360's have been sold than PS3's.
Sony is getting hosed, if you wish. MS licensed the IP and produce the chips themselves (well, not literally themselves but you know what I mean), thus ATI gets much less from the deal. Sony needed a chip kinda desperately, so that's why nV could get a good deal.
I expect more growth potential for nV in the mobile phone area and such stuff then with PS3, at least in 2007.
geekcomputing
Newcomer
Nvidias mobile phone chip sales are very low but they have been putting a lot of R and D into it and acquiring companies to help out (media Q, hybrid graphics.. i think they were mobile phone related.. id have to go look it up)
should be a big market for them as it seems to be taking off a little bit.
should be a big market for them as it seems to be taking off a little bit.
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