Graphics chip king and Motley Fool Stock Advisor recommendation NVIDIA (NASDAQ:NVDA) reported its fiscal fourth quarter of 2008 results yesterday. You don't even have to read the news to know how it read -- the stock's plunge tells it all.

But OK, just to be safe:

  • Sales dropped 16% for the year, then fell off the proverbial cliff in Q4 -- down 60%
  • Similarly, the company lost a nickel a share for the year, with most of this coming in Q4 --a $0.27 loss

According to CEO Jen-Hsun Huang, fiscal 2008 was "extremely difficult," and the economic environment in which NVIDIA operates is both "difficult" and "uncertain." And yet, as Huang tells it, 2008 was also "one of our best years of innovation." The company also boasted of licensing software development technology to big-league gamers like Electronic Arts (NASDAQ:ERTS).

NVIDIA also spoke of the promise inherent in the arrival of netbook PCs, or "mini-notebooks." Companies like Hewlett-Packard (NYSE:HPQ) and Dell (NASDAQ:DELL) make the things, and NVIDIA is partnering with Intel (NASDAQ:INTC) to produce the "NVIDIA Ion Platform," marrying Intel's logical lobe with NVIDIA's right-lobe graphics technology to form a single "brain" to run the little comps. For all the promise new tech developments hold, NVIDIA had an undeniably bad year, and an even worse fourth quarter. But that doesn't necessarily mean you should avoid the stock.

Huh? Why not?
A couple weeks ago, a Wall Street analyst at Auriga USA made the prescient argument that the global chip industry is headed for a prolonged, "secular" downturn. Auriga called Applied Material's quarter exactly right, just as it's called Micron (NYSE:MU), AMD (NYSE:AMD) right in recent months.

This speaks strongly in Auriga's favor, and if you hew to its view, then by all means -- sell NVIDIA. Personally, though, that's not the way my thinking runs. I think the PC will not go out of style, that people will eventually start buying 'em again, and that when they do, NVIDIA will resume earning money -- as it did every year for the past decade, 2008 excepted. When -- not if -- NVIDIA returns to its performance of yesteryear, eight bucks a share is going to look like a screaming bargain.

Of course, by then, that low price will be long gone.

Want to know more about the chip industry's "issues"? Read:

Fool contributor Rich Smith does not own shares of any company named above. Intel and Dell are Motley Fool Inside Value selections. NVIDIA and Electronic Arts are Motley Fool Stock Advisor recommendations. The Fool owns shares and covered calls of Intel. Why do we tell you this? Because The Motley Fool has a disclosure policy.