This summary is based on the third quarter fiscal 2009 earnings call conducted by NVIDIA Corp. (NVDA) on November 6, 2008.
Management:
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Co-Founder, President and CEO: Jen-Hsun Huang
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CFO: Marv Burkett
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VP, IR and Communications: Michael Hara
Key Investors Issues
- Revenue was $898 million, 20% down from $1.12 billion in the prior year.
- Net income of $61.7 million, or 11 cents a share was 74% down from $236 million or 42 cents a share in 2007.
- The firm repurchased $300 million worth of stock.
Year to Date Highlights:
- Revenue increased 2% to $2.94 billion compared to $2.90 billion in 2007.
- Net income was $117.6 million, or 20 cents per diluted share, down 78% compared to $540.7 million or 89 cents per diluted share in the prior year.
Third Quarter Highlights
Revenue was $898 million, 20% down from $1.12 billion in the prior year despite margins improving to 41%
- Revenue in the GPU business, which includes desktop, notebook, and memory was down 8% quarter to quarter, or $42 million.
- Desktop was down 12% and notebook was down 4% and within desktop, the softness was unit-related as ASPs actually increased slightly from the second quarter.
- Within notebook, units increased but there was a slight decrease in ASPs.
- MCP showed strong growth of nearly 19% quarter to quarter, or $31 million, as the firm ramped volume production of MCP79, which is the GeForce 9300 and 9400 series.
Professional solutions including the workstation business, grew by 11%, or $20 million.
- The consumer business was relatively flat quarter to quarter and had growth in the Sony royalties offset by a decline in the mobile business.
- Operating expenses were $311 million, which includes $8.3 million of restructuring costs, with headcount at 5,293, which is down by 260 from the end of the second quarter.
- Cash and equivalents and marketable securities were $1.3 billion, which is down by $352 million from the second quarter.
- Net income of $61.7 million, or 11 cents a share was 74% down from $236 million or 42 cents a share in 2007 due to declines in revenue and higher research and development expenses.
The firm repurchased $300 million worth of stock.
- The operating cash flow was a positive $43 million and accounts receivable were $608 million, which is down $72 million from the second quarter, and DSO was 62 days, also an improvement from the second quarter.
- Inventory grew by $92 million quarter to quarter and the DSI grew to 90 days with growth in inventory primarily in new GPU products and in MCP79.
- Accounts payable and accrued liabilities declined by $131 million during the quarter.
Operational Metrics:
- The firm transitioned its performance segment GPUs to 55nm and now have the fastest products at each price point, positioning it to recapture share.
- Together with Apple, NVIDIA launched a new GeForce 9400M motherboard GPU for its new lineup of Mac notebooks, which is the industry\''s first processor to integrate three complex chips.
- It delivers up to 5 times performance improvement over Intel integrated graphics in one-half the space.
- The MacBook Pro comes standard with a hybrid combination of two GeForce GPUs – where the 9400M is used for maximum battery life and a GeForce 9600M GT for high performance mode.
The firm announced the NVIDIA Quadro CX, the industry\''s first accelerator for Adobe\''s Creative Suite 4 content creation software.
- NVIDIA specifically designed and optimized the Quadro CX to enhance the performance of the CS4 product line and give creative professionals the ultimate in performance and productivity.
- At this year\''s SIGGRAPH, NVIDIA set a new milestone in computer graphics by demonstrating the world\''s first real-time fully-interactive ray tracer.
- The interactive ray tracing solution adds a new capability to the Quadro visual computing solutions, and will enable customers, like the auto industry, to preview car designs and demonstrate new cars to customers.
Key Initiatives:
- The firm increased its exposure to the notebook market by using the new motherboard GPU to bring five times better graphics performance to Intel notebook platforms, the fastest-growing segment of the PC market.
- With the announcement of Adobe\''s Creative Suite 4 and the firm’s QuadroCX accelerator for CS4, it has expanded its market footprint beyond gamers and industrial designers to include the creative generation.
- There is a ground swell of new applications enabled by CUDA, from digital photography to the excruciating process of converting movies for your iPod.
- The firm will announce stereoscopic 3-D glasses for GeForce.
