VR-Zone

NVIDIA's initially forecasted revenues for Q2 FY 2011 were $950-970 million. However, in July, NVIDIA revised their forecasts to $820 million, so the Q2 FY 2011 financials should be no surprise. NVIDIA's Q2 FY 2011 - 2nd May to 1st August - final revenue was reported as $811.2 million, a sharp drop from Q1 FY 2011's $1,001.8 million. The net income dropped from $137.6 million from a hefty net loss of $141 million.

In Q2 FY 2011, NVIDIA have established the Geforce GTX 400 series, yet the demand seems to be weak. CEO Jen-Hsun Huang blames "weak PC demand in Europe and China". However, this weak demand certainly didn't seem to affect AMD's GPG division.

Fortunately, NVIDIA's high margin Quadro and Tesla divisions "delivered excellent results", along with Tegra, offsetting the GeForce underachievement to some extent.

The main reason for the hefty loss is a $193.9 million charge relating to "weak die/packaging material set [....] before July 2008", or in other words, settlements for the infamous Bumpgate.

Looking to Q3 FY 2011, NVIDIA expects revenue to increase from 3 to 5 percent. Unfortunately, with dropping prices for GTX 400 products, margins will tighten up further. For consumers, this is good news, as NVIDIA's GTX 460 and GTX 470 are suddenly better value than AMD's HD 5830 and HD 5850 respectively.

Q3 will be an important quarter for NVIDIA, and perhaps its last chance to consolidate the GeForce 400 series, for a while, with AMD's next generation HD 6000 series release early in NVIDIA's Q4 FY 2011. In addition, with 28nm still several quarters away, Fusion/Sandy Bridge expected to eat into entry level markets, NVIDIA will have a tough time in the GeForce business for the next few quarters. The high margin Quadro and Tesla divisions have every chance of continuing being successful, however.

Reference: NVIDIA Press Room