The damage is done. Now comes the revival.
Graphics-chip king and Motley Fool Stock Advisor recommendation NVIDIA
We already know about the price war with AMD
As the share price has swooned, I admit I've been looking intently at buying some NVIDIA shares. The one thing that's held me back was my fear that if you see one cockroach, you know there are a hundred more lurking under the fridge. Specifically, hearing NVIDIA warn of $150 million to $200 million in anticipated warranty costs last month, I wondered how many more charges might be hiding under NVIDIA's icebox.
Management termed the final figure of $196 million "a non-recurring warranty charge." Later, in the post-earnings conference call, CEO Jen-Hsun Huang went a step further in allaying our concerns: "We're not expecting more writedowns in the future. When we scoped out the problem … we felt we had enough data to project out the anticipated failures from the various platforms that are out there."
Mind you, settling on a charge just $4 million short of NVIDIA's previous worst-case scenario doesn't seem conservative to me. But I'm willing to give NVIDIA some rope.
It's up to management to either hang itself, or hoist its credibility to new heights.
Want to know more about NVIDIA's issues? Read: