NVIDIA’s shares have tumbled by over 20 percent in after hours trading after it announced that Q2 revenue was going to fall short of the guidance it provided on 8th May.
On top of that it announced a one-time charge of between $150 million and $200 million from weak die/packaging material used in some previous generation GPU and MCP products. This has led to higher than normal failure rates in notebooks with certain configurations.
The reasons listed for the lower sales forecast of $875 million to $950 million were: “end-market weakness around the world, the delayed ramp of a next generation MCP, and price adjustments of our GPU products to respond to competitive products.” In the previous quarter, revenue was $1.15 billion and its reported that analysts were expecting something in the region of $1.1 billion for Q2.
Regarding the one-time charge, NVIDIA president and CEO Jen-Hsun Huang said: “Although the failure appears related to the combination of the interaction between the chip material set and system design, we have a responsibility to our customers and will take our part in resolving this problem.”
Graphics industry guru Jon Peddie gave us his initial take on the revenue shortfall. “NVIDIA has been the victim of three factors,” he said. “Q2 is seasonally a quiet period but NVIDIA performed above expectation in the previous Q2 so it got over confident with its forecasting this time. They, and others yet to report, have been impacted by the general slump caused by the sub-prime crisis, high oil price, etc. Lastly, they are facing a reinvigorated AMD/ATI.”
Here's a screenshot of NVIDIA's listing on Google finance showing the after hours trading in its shares.
Press release: NVIDIA Provides Second Quarter Fiscal 2009 Business Update