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Summary
conference date: August 10, 2006
for quarter ending: June 30, 2006 (2nd quarter 2007)
Overview: Management portrays the company as doing well but won't give out the numbers (except revenues) while they voluntarily review stock option dating issues.
Basic data:
Revenues were $687.5 million, up less than 1% sequentially from $683 for the March quarter and up 20% from $574.8 million the year-earlier quarter.
Margins improved due to better mix.
They are not providing GAAP net income because of a voluntary review of stock-based option compensation.
Cash down $100 million due to stock repurchases.
Guidance: Q3 revenue increases in notebooks, desktop, MCP; flat workstation and handheld, for sequential growth of 8 to 10%.
Conference Highlights:
ATI purchase by AMD leaves NVIDIA as the only independent graphics chip maker. They will support all CPUs; will continue to provide GPUs to AMD. Believes AMD/ATI improves competitive position of NVIDIA.
17% increase in professional products, desktop 5% decline sequentially.
Admitted in press release to "incorrect measurement dates" for stock-based compensation, and may restate numbers when accounting is complete.
Reviewed new products and design wins. 2500 x 1600 resolution is now available, "extreme high-definition gaming."
Desktop discrete GPU demand continues to be strong. Shipped over 20 million SLI GPU's to date.
First HD-DVD and Blue Ray notebooks powered by NVidia. Believes Microsoft Vista will grow demand for discrete GPUs.
AMD server segment share will double by end of year. Can capture 60% of AMD notebook segment.
Quadro revenues up 17% sequentially and 25% year-over-year. Quadro-plex is first external graphics subsystem for workstations or servers, and can be rack-mounted.
Hand-held GPUs did well. Includes Razor and Sliver lines from Motorola.
Q&A:
Revenues within quarter? As typical, starts off slow, accelerates for back-to-school in July.
ASPs (actual sale prices) in desktop GPUs was up 16%, but that was somewhat related to mix changes.
Intel relationship due to AMD/ATI merger? Very diplomatic response, but believes Intel will not buy AMD core logic, so will up buying from NVIDIA.
Motorolla handsets? Focus is on high-end market; competitors are more low-end.
Operating expenses? Expects only moderate growth from 1st quarter.
Expecting revenues from Sony this quarter; depends on how fast they ramp up new PlayStation3.
Handheld revenue was up 12% quarter-to-quarter.
MCP business? Will focus on segments were GPU technology can play a large role. Gamers want GForce regardless of whether they want an Intel or AMD processor. 3-D graphics will become increasingly important with shift to Vista.
Not that excited about flat-panel, set-top and similar businesses because they are not really computationally intensive.
Integration of GPU and CPU? Not likely because of large size of GPU and constant desire for more value from GPU.
Intel Conroe is a very exciting processor for high-end segment. The high-end PCs will hopefully have SLI with GeForce.
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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. Before making or terminating an investment you should always verify any factual basis of your decision.
Copyright 2006 William P. Meyers