Here’s something for you to chew on during a Monday morning: NVIDIA’s Q3’08 financial results. NVIDIA’s quarters end a bit later than everyone else, so while AMD reported its Q3 data a couple of weeks ago, NVIDIA only posted its results a couple of days ago.

Q2 as you may recall was a bust for NVIDIA, with their first loss in quite some time due to a combination of problems regarding product prices and the costs of replacing defective mobile products. Not a great deal has changed in a single quarter, and Wall Street’s Q3 projections were rather pessimistic as a result.

With that said, for Q3 NVIDIA managed to get back into the black, posting a profit of $61.7 million, on revenue of $897.7 million. This is a marked decline from last year, where in the same quarter they pulled in $1.12 billion in revenue, alongside $235 million in profit. The silver lining to this however is that those pessimistic projections called for around half as much profit as NVIDIA actually posted, which ultimately made this a good quarter for NVIDIA. The company has been on solid enough ground that there hasn’t been a question of whether they’d continue turning a profit after Q2, but how much alongside what kind of revenue has been the question, and now we have the answers.

One interesting item from NVIDIA’s statement was that their gross margin is up, nearly 3%, from 39.1% to 41.9%. As NVIDIA has continued to take a soaking on the GTX 200 series, a more rational outcome would have been for those GPUs to drag the gross margin down; instead and in spite of that it’s up. Clearly NVIDIA is still finding a way to make money on what’s an expensive chip to make, and barring further price cuts things should further improve as they finish transitioning their GPUs to 55nm. Their “performance segment “ (which we take to mean the sub-$200 GF9 parts) is now entirely at 55nm, for example.

As we mentioned earlier, much of Q3 was driven by the same things as Q2; poor pricing and lost sales are the primary reasons that NVIDIA’s revenue and profit have dipped so much. But one significant thing has changed this quarter, and it has been NVIDIA’s ace that allowed them to beat the estimates: Apple. Getting the GeForce 9400M and 9600M into Apple’s laptops is a big deal for NVIDIA, as while those products aren’t particularly profitable, Apple’s fortune in the laptop market means that NVIDIA will be shipping a lot of them. Care should be taken not to read too much into this, but it’s a positive note on what’s otherwise a rough time.

And that rough time will be continuing into Q4. You know there’s a recession going on when Q3 revenue is expected to exceed Q4, which is exactly what is happening. NVIDIA is not counting on the usual Christmas spending that gives tech companies strong 4th quarters, which puts them in line with the rest of the tech industry where everyone is finally starting to feel the full brunt of the sputtering economy. NVIDIA’s own predictions would put Q4 revenue at around $850 million, making Q4 much like Q3: Shrinking revenue, with a decent but not fancy profit.

Finally, Rambus would like to remind everyone that they’re still trying to shake down NVIDIA for money (and the timing is not coincidental). Near the end of Q2 they filed suit against NVIDIA, and now they’re filing a complaint against NVIDIA with the US International Trade Commission. The complaints and the requested remedy are the same: Rambus wants an injunction barring NVIDIA and its partners from importing or selling infringing products (i.e. just about everything NVIDIA makes). Injunctions are often used to drive a company back to the bargaining table, so it’s very unlikely we’ll see one, but it bears mentioning. Given how slow the ITC is (it’ll take 30 days just to decide if they want to investigate) it’s not a matter that’s going to be resolved any time soon.

We’ll close with a quick mention of AMD and where things stand. The economic problems we mentioned earlier are just as applicable to AMD’s graphics division as they are NVIDIA, so there’s little expectation that either company will pull away from the other. If you ever wanted an example of equality in the graphics market, this is pretty much it; in the consumer space both are roughly tied in performance, and in the financial space both are slightly profitable. NVIDIA does blow away AMD in graphics revenue but this is largely due to better stratification by NVIDIA – they have a much better position in the high performance computing market than AMD’s graphics division does. It wouldn’t be too surprising to see someone blink and lower their prices again, with similar products and similar profits, neither one is well positioned to do much else in a single quarter beyond playing with prices.


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  • kilkennycat - Monday, November 10, 2008 - link

    nVidia is sitting on roughly $1.2 billion cash with ZERO debt: AMD has roughly $3 billion NET debt. So....nVidia is far more in control of their own future in recessionary and credit-crunch times than AMD. The debtor plays the tunes its lenders want to hear, which is usually very short-term-profit oriented. Plus the interest-cost on that huge debt is an unwelcome sponge for scarce profits.

    Btw, at the current depressed stock prices AMD (including ATi) has a market value of $2billion, nVidia has a market value of $5billion. That debt sure is pulling AMD to its fiscal knees.
  • verd14 - Thursday, November 13, 2008 - link

    Shouldn't AMD's retreat from the FAB bizz free up some capital for their debt payments? Reply
  • Shmak - Tuesday, November 11, 2008 - link

    "If you ever wanted an example of equality in the graphics market, this is pretty much it; in the consumer space both are roughly tied in performance, and in the financial space both are slightly profitable."

    The author is not talking about equality between the financial situation of these companies, he is talking about the equality of their offerings in the market right now. Does every article need to state the obvious financial disparity? I think most readers are well aware of it.
  • Casper42 - Monday, November 10, 2008 - link

    Ryan, I have been holding off on an upgrade to the GTX 260/280 as I heard they pull alot of power and put out alot of heat. I figured with the 9800 GTX+ being released, it was only a matter of time before the GTX Cards got a fab refresh as well.

    So where the heck are they?

    I had originally heard maybe Sept but we're way past that point and I am getting an itchy trigger finger to start putting together an X58 machine to replace my aging Tyan K8WE based gaming rig. I was considering a pair of 9800 GTX+ cards previously, and now they are way down in price, but I would rather get a single GPU card with similar performance so that even games that don't do well with SLI will still perform well.
  • Zillatech - Wednesday, November 12, 2008 - link

    I think they will be out very soon! Here is a link to some current news on the lower power draw ~">

    Sounds good to me :)
  • AnnonymousCoward - Tuesday, November 11, 2008 - link

    You heard they pull a lot of power? Why don't you see the data and judge for yourself:">

    At idle they are super low, and even at load the 260 is less than the 9800+. If I remember right, don't expect 55nm GT200 until 1Q09, and if it's like the 9-series, don't expect any noticeable speed increase. The $200 that a 260 costs today won't go much lower 3 months from now, even with 55nm parts out.
  • 9nails - Wednesday, November 12, 2008 - link

    Those numbers are still pretty hefty. Not a good comparison, but an ASUS eee Box PC's total system power needs just 22 watts with an Intel Atom CPU.

    In the benchmarks that you present, I would guess that if I had a motherboard with an integrated GPU instead of the discrete graphics card, keeping all the other components the same, it would consume about 70 - 90 watts at idle. That's the figure that I'd want to compare an add-on GPU card against at idle. Again, it's not apples to apples since an integrated GPU lacks dedicated memory, and they can't come close to the resolutions and performance a 9800 GTX can offer. But on the other hand, I would expect Nvidia to engineer a solution able to turn off power through under clocking or turning off additional cores in the GPU based on task when it's not needed. Green computing is our future and I know at least that 100 watts of additional power is not needed as I sit here and type!
  • AnnonymousCoward - Thursday, November 13, 2008 - link

    Your integrated graphics estimate is correct (85W for an Intel Quad core:"> But it's no wonder since integrated graphics can't perform worth crap.

    GTX280 numbers impress me greatly. Idle power usage is 75% of the 9800GTX+, while having DOUBLE the transistors and 65nm vs 55nm.

    Who cares if your monster gaming PC consumes 74W more than your mother's web box? And who cares about "green computing"? Low-power servers matter, and replacing street lights with LEDs would be nice, but who cares about high end video cards conserving a few watts!

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