"And so it was that, on the day before Independence Day, NVIDIA
Was I right or was I wrong when I penned these words last month, just days after NVIDIA's explosive news of a double-digit sales shortfall combined with a nine-figure earnings writedown? We'll find out tomorrow, when this Motley Fool Stock Advisor recommendation files its fiscal Q2 2009 report after close of trading.
What analysts say:
- Buy, sell, or waffle? Twenty-seven analysts give NVIDIA 15 buy ratings and a dozen holds.
- Revenue. They expect to see sales slip 3% to $908 million.
- Earnings. Profits are predicted to plummet 65% to $0.12 per share.
What management says:
In case you missed the news that torpedoed NVIDIA last month, here's a rundown: NVIDIA is taking a $150 million to $200 million charge "to cover anticipated customer warranty ... and other ... costs ... arising from a weak die/packaging material set in certain ... MCP and GPU products used in notebook systems." This charge will exacerbate gross margin and sales weakness blamed on "end-market weakness," "delayed ramp of a next generation MCP," and price competition. NVIDIA's latest Q2 sales estimates bracket analysts' estimates, ranging from $875 million to $950 million.
What management does:
All of which adds up to the inescapable conclusion: Tomorrow's news is going to be a big change from what we've come to expect from NVIDIA. Quarter after quarter, the company had been widening its margins, until last quarter, when they slipped only a little. Tomorrow, they could slip a lot.
1/07 |
4/07 |
7/07 |
10/07 |
1/08 |
4/08 |
|
---|---|---|---|---|---|---|
Gross |
42.4% |
43.1% |
43.8% |
45.2% |
45.6% |
45.5% |
Operating |
14.8% |
15.3% |
16.7% |
18.9% |
20.4% |
20.4% |
Net |
14.6% |
15.1% |
16.5% |
18.7% |
19.5% |
19.1% |
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
Yet even if things turn out as badly as feared, make sure to view the news in context. NVIDIA remains profitable even as archrival AMD
And NVIDIA's market presence is widespread. You'll find NVIDIA chips in computers from Apple
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