For NVIDIA, strength in Xbox and chipsets will offset flattish revenues in
the core business. Chipset strength and potential slight gross margin upside is
being driven by the company’s new logic chip for the Intel platform, a product
priced at a 50% to 100% premium to Intel’s chipset at high margins due in part
to its exclusive ability to allow two graphics cards in a high-end gaming PC.
NVIDIA’s second-half performance may "lag somewhat" as the "widely known Xbox
wind-down" begins.

Weakness at ATI creates a "better near-term opportunity" for NVIDIA shares.
ATI is pricing in a downside near-term scenario caused by the back-end material
constraints and seasonal PC weakness but would getting aggressive at current
levels ahead of the strong second-half higher margin consumer ramp and potential
milestones including next Thursday’s Xbox 2 announcement, Computex desktop
graphics announcements, two new handset OEM ramps, and the DirecTV build cycle.

For NVIDIA, strength in Xbox and chipsets will offset flattish revenues in
the core business. Chipset strength and potential slight gross margin upside is
being driven by the company’s new logic chip for the Intel platform, a product
priced at a 50% to 100% premium to Intel’s chipset at high margins due in part
to its exclusive ability to allow two graphics cards in a high-end gaming PC.
NVIDIA’s second-half performance may "lag somewhat" as the "widely known Xbox
wind-down" begins.

Weakness at ATI creates a "better near-term opportunity" for NVIDIA shares.
ATI is pricing in a downside near-term scenario caused by the back-end material
constraints and seasonal PC weakness but would getting aggressive at current
levels ahead of the strong second-half higher margin consumer ramp and potential
milestones including next Thursday’s Xbox 2 announcement, Computex desktop
graphics announcements, two new handset OEM ramps, and the DirecTV build cycle.