NVIDIA Q2 finances show loss; tough desktop market & repairs blamed

Chris Davies - Aug 13, 2008

NVIDIA has announced its Q2 revenue figures and, as expected, the company has posted a revenue loss compared to the same period last year.  Revenues for the most recent three month period were $892.7 million, while those of the same period $935.3 million, a decrease of 5-percent.  The loss, the company’s first in five years, is being blamed on two factors: the general increasing competition in the video card industry and the “one time” charge to cover expected warranty repairs.

The latter point refers to the ongoing issue with several ranges of graphics products produced by NVIDIA.  The company maintains this will only affect notebooks, but several sources have suggested that the problem will only get worse and, in fact, impact on desktop hardware.

“During the second quarter of fiscal 2009, NVIDIA recorded a $196 million charge against cost of revenue to cover anticipated customer warranty, repair, return, replacement and associated costs arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products used in notebook systems” NVIDIA press release

Desktop graphics cards had a disproportionate impact on revenue loss, with NVIDIA citing a combination of “miscalculation of competitive price position” and the general weakening of the desktop market itself.  Conversely, their notebook GPU, MCP, and Professional Solutions groups grew a combined 27 percent year-on-year.

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