Analyst Conference Summary

NVIDIA Corporation

conference date: May 10, 2007 @ 2 PM Pacific Time
for quarter ending: April 29, 2007 (1st quarter fiscal 2008)

Partial summary. Full summary will be available shortly.

I don't own it
Forward Looking Statements

Overview: Great results if you discount seasonality.

Basic data:

Revenues were $844.3 million, down 4% sequentially but up 24% from $681.8 million year-earlier.

GAAP net income was $132.3 million, down 19% sequentially but up 44% from year-earlier. EPS was $0.33.

Non-GAAP net income was $164.4 million. Non-GAAP EPS was $0.42.

Cash and equivalents ended at $1.3 billion.

Inventories ended at $332.6 million, down sequentially from $354.7 million.


Q2 is usually slowest quarter of the year for the PC industry. Believe revenue will be flat to slightly up. Notebook GPU revenue to grow and MCP revenue to recover. Flat to slightly increasing gross margin. Operating expense up 3% sequentially. Tax rate 14%.

Conference Highlights:

"Over the next 10 years, we estimate that over 10 billion GPUs will be needed."

Non-GAAP gross margin 45.4%, a record. GAAP gross margin 45.0%.

GeForce line had 71% year-over-year revenue growth and has 60% segment share.

nForce MCP line revenue increased 25% year-over-year; leads in AMD segment.

Quadro line up 39% year-over-year.

Segment year-over-year growth: desktop GPU 13%; notebook GPU 71%; MCP 25%; professional solutions 39%; mobile devices 49%.

Captured number 1 position in desktop graphics and increased lead in 5 categories. First DirectX 10 GPUs introduced in April. Combined Blu/HD processing introduced.

Expected memory and MCP weakness for quarter, but MCP weakness was greater than expected because of AMD weakness. Desktop and professional solution GPUs were better than expected, both growing sequentially.

Now has four segments: GPUs; PSB (professional solutions); MCP (motherboard chips); CPD (consumer).

Headcount was flat. $204 non-GAAP operating expenses. Capital expenditures were $38 million; depreciation $32 million. 14% tax rate.

Repurchased $125 million of stock in quarter at $31.50 per share average.

Inventories ended at $332.6 million, down sequentially from $354.7 million.

Rolled out new GPUs yesterday to correspond to new Intel Santa Rosa notebook processors. But expects AMD to regain some desktop motherboard share in Q2. Has only SLI motherboards for Intel processors. GPU computing is gaining momentum at universities.


ATI's new product line pricing issue? Always takes competition seriously. R600 will probably be positioned against our low-end enthusiast offering. We are far ahead on time to market and have GeForce 8 architectural advantage. Our prices are very competitive, but enthusiasts are mainly interested in getting best product.

MCP share on AMD platform? We have won a lot of design wins since the ATI-AMD combination and will have a fair share of market. SLI is available only from NVIDIA. We have technological advantages, but we will also have to execute well.

Why are operating expenses expected to increase this quarter? We hired a lot of people. We expect to continue to hire people. Expects 3% is reasonable rate for each quarter. Investing in growth opportunities.

Cash use? Expects to continue to generate significant cash. No definite plans for cash yet. Not much left in previous repurchase authorization.

MCP business expectations? Result of AMD channel issues. Athlon CPUs with NForce chips; is seeing sell through picking up in channel. They replenished channel with price-positioned Athlons; it is a great product, there is not reason it would not sell.

GPU in notebook growth rate? We have gained a great deal of market share the last 4 years. GPUs go well with Vista, BluRay and HDDVD.

Important to note it is the only semiconductor product that has increased in ASP (price) over the past 10 years. GPUs are becoming increasingly important.

Gross margins? We can go higher, just a question of time frames. But we also want to invest in quality people and new products. Margins on GAX families are good, as are GPU-on-motherboard chip margins.

Intel platform revenue contribution increases every quarter; will represent a sizable opportunity for us.

Cautious guidance is due to typical weak seasonality of PC market. Our products are well situated.

Does not expect to be "leapfrogged" by ATI-AMD. Expects to maintain leadership and possibly expand market share.

Very enthusiastic about bringing GPUs to motherboards in single-chip, embedded form.

Has 0% of integrated Intel market right now, so any gains there would be good.

More NVIDIA reports and summaries
OpenIcon Analyst Conference Summaries Main Page

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 2007 William P. Meyers