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[DT] NVIDIA Predicts Weaker Earnings Due to Defective GPUs

post #1 of 13
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Quote:
Storm clouds are gathering as NVIDIA faces a reinvigorated competitor

As the old saying goes, when it rains it pours. NVIDIA was performing beautifully thanks to aggressive pricing and performance of its 8000 series of graphics cards. It looked poised to leave competitor AMD (formerly ATI) in the dust. However, the latest round in graphics war has marked a dramatic turnaround with AMD's 4850 and 4870 outperforming NVIDIA's offerings at a lower price.

While NVIDIA still holds a tenuous grip on the highest end offerings, with its GeForce GTX 280 GPU, this might soon slip, depending on the performance of AMD's dual processor 4870 X2 (R700) card, likely coming in Q3 2008. Meanwhile, NVIDIA faces challenges from Intel in its low-end and laptop graphics offerings, and from AMD's PUMA chipset/graphics package in the laptop market.

The economic repercussions of NVIDIA's slippage are already visible. NVIDIA announced yesterday that it was going to turn in revenue of $875 million to $950 million for Q2 2008, which ends July 27. This is significantly lower than the current analyst expectations of $1.1 billion.

That was not the end of the bad news from NVIDIA either. It announced that it was facing a massive recall, due to overheating GPUs in notebook computers. NVIDIA reported higher than average failures in both the laptop GPUs and in laptop chipsets.

NVIDIA said that the chips and their packaging were made with materials that proved to be too "weak". NVIDIA passes the blame to notebook manufacturers, which it says contributes to the problem. Typically notebooks have poorer ventilation and components concentrated in a smaller space than desktop computers.

The result of the recalls is that NVIDIA will be taking a onetime charge of $150M USD to $200M USD to cover the damages. It plans to use the money to repair or replace defective parts. It also hopes to collect part of the money from insurers it uses. However, it has acknowledged its problems and switched the materials it uses.

The news has resulted in NVIDIA taking a beating on the stock market, sliding over 25 percent.
Dailytech

Lots of nVidia news, I don't think one has been posted yet.
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post #2 of 13
NVIDIA predicts weaker earnings....... ACTUALLY due to some competition for once
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post #3 of 13
Wow, that's... miserable-sounding. I'm sure they'll hit back again maybe soon that's what usually happens... right?
post #4 of 13
damn.. Nvidia is getting hit on all sides XD
post #5 of 13
Nvidia's stocks TANKED today.. They opened $5 lower than at the close of the stock markets yesterday. The volume of trades went through the roof. It was ~$18 per share yesterday, and now its trading at or less than $13.

Link
Edited by 0rion - 7/3/08 at 2:20pm
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post #6 of 13
Quote:
Originally Posted by 0rion View Post
Nvidia's stocks TANKED today.. They opened $5 lower than at the close of the stock markets yesterday. The volume of trades went through the roof. It was ~$18 per share yesterday, and now its trading at or less than $13.

Link
ROFLMAO
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post #7 of 13
I suspect the economic slowdown would have decreased demand from OEM's such as Dell, HP and Mesh. That combined with competition and faulty products, they could be in for a rough time in Q2/Q3
post #8 of 13
Quote:
Originally Posted by dualhYbrid View Post
NVIDIA predicts weaker earnings....... ACTUALLY due to some competition for once
The competition isn't doing too well either in the stock market
AMD's at 5.09 a stock now o_o
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post #9 of 13
Quote:
Originally Posted by dualhYbrid View Post
NVIDIA predicts weaker earnings....... ACTUALLY due to some competition for once
EXACTLY what I was thinking when I saw the title...

~Gooda~
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post #10 of 13
Now every one is selling their nVidia stocks to buy AMD ones, and then to sell them later to get one of those Intel GPUs hahaha
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