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pww.comNVIDIA Corporation, Q3 2010 Earnings Call, Nov-05-2009 - NasdaqGS:NVDA

NasdaqGS:NVDA

Michael W. Hara [Former Senior Vice President Investor Relations] 💬

Michael W. Hara, the Former Senior Vice President of Investor Relations at NVIDIA Corporation, provided the following comments during the Q3 2010 Earnings Call on November 5, 2009:

  1. Opening Remarks:

    • Introduced himself and welcomed participants to the NVIDIA's conference call for the third quarter of fiscal 2010.
    • Mentioned that he was joined by Jen-Hsun Huang, President and CEO, and David White, CFO.
    • Announced that after prepared remarks, the call would open up to a question-and-answer session, with the request that participants limit themselves to one initial question with one follow-up.

  2. Legal and Webcast Information:

    • Reminded attendees that the call was being webcast live on NVIDIA's Investor Relations website and recorded.
    • Stated that a replay of the conference call would be available via telephone until November 12, 2009, and a webcast replay would be available until the next quarter's call.
    • Emphasized that the content of the call was NVIDIA's property and could not be reproduced or transcribed without prior written consent.

  3. Forward-Looking Statements Disclaimer:

    • Noted that the call might include forward-looking statements based on current expectations and subject to risks and uncertainties.
    • Directed listeners to the company's earnings release, Form 10-Q for the fiscal period ending July 26, 2009, and the reports on Form 8-K filed with the SEC for a discussion of factors that could affect future results and businesses.

  4. Non-GAAP Financial Measures:

    • Mentioned that the call would discuss non-GAAP financial measures and that reconciliations to GAAP financial measures could be found in the financial release posted on the company's website.

  5. Format Changes:

    • Announced changes to the call format, including posting David White's financial overview on the website prior to the call and providing the corporate overview himself.
    • Indicated that Jen-Hsun Huang would be available for the question-and-answer portion.

  6. Business Overview:

    • Highlighted the progress made in the third quarter, noting that GPU demand increased due to a healthy market environment and new applications requiring GPUs.
    • Emphasized the company's investments in parallel computing and the foundation it laid for growth in the coming year.
    • Discussed the advancements in computer graphics, the importance of GPUs in handling parallel tasks, and the growth of GPU computing in various industries.
    • Mentioned the success of Tegra devices and the impact of technologies like PhysX and 3D stereo on gaming.
    • Talked about the benefits of parallel computing for professional users and the advancements in data centers.
    • Highlighted the momentum behind parallel computing, the GPU Technology Conference, and the announcement of the Fermi computer architecture.
    • Discussed the company's growth strategy and focus on being the best in visual and parallel computing.

  7. Transition to CFO:

    • Handled the call over to David White for a financial overview.

  8. Closing Remarks:

    • Thanked everyone and looked forward to speaking again next quarter.

Throughout the call, Michael W. Hara served as the moderator and provided context for the discussions, setting the stage for the financial and business updates.

David L. White [Former Chief Financial Officer] 💬

David L. White, the Former Chief Financial Officer of NVIDIA Corporation, provided key financial details and insights during the Q3 2010 Earnings Call. Here is a detailed summary of his statements:

Financial Highlights:

  • Revenue: $903.2 million, up 16% sequentially.
  • Gross Margin:
    • GAAP: 43.4%
    • Non-GAAP: 41%
  • GAAP Operating Expense: Just under $284 million.
  • GAAP Net Income: $107.6 million or $0.19 per diluted share.
  • Non-GAAP Income: Also $0.19 per diluted share.

Business Performance:

  • GPU Business:
    • Up nearly 25% sequentially.
    • Desktop and Notebook GPU segments up 19% and over 41% respectively.
  • Supply Constraints:
    • Particularly in 40-nanometer products, which constituted 19% of total GPU revenue.
  • Professional Business:
    • Saw another quarter of growth, up 11% sequentially.
    • Revenue levels still below those of over a year ago, but quotation activity continues to gain momentum.

Gross Margin Improvement:

  • Factors:
    • Significantly higher than anticipated unit sales of GPUs.
    • Improved 55-nanometer yields and other cost reductions.
    • More favorable product mix across businesses, especially within the GPU business itself.

Inventory:

  • End of Quarter:
    • Essentially flat compared with the prior quarter.
    • Inventory days on hand improved to 47 (non-GAAP).
    • Channel inventory remains very low at around a month.
  • Demand Outstripping Supply:
    • No indication of OEMs building inventory.

Outlook for Q4 Fiscal 2010:

  • Revenue:
    • Expected to be up slightly, approximately 2% from Q3.
  • 40-nanometer Products:
    • Expected to grow significantly quarter over quarter but remain supply-constrained.
  • GAAP Gross Margin:
    • Expected to be 40% to 42%, essentially flat with Q3, excluding insurance reimbursement.
  • GAAP Operating Expenses:
    • Expected to be in the range of $305 million, up from Q3 due to:
      • 14-week quarter (vs. usual 13 weeks).
      • Costs relating to a record number of product bring-ups.

Additional Comments:

  • Forecasting Challenges:
    • Demand has been more robust than anticipated, leading to supply constraints.
    • Lead time from wafer start to shipment is 12 to 13 weeks, impacting responsiveness to demand.
  • Chipset Business:
    • Primary aim is the MCP61, the only single-chip solution for AMD platforms.
    • MCP61 enables the lowest cost solution for AMD.
    • AMD CPUs lost share, impacting the MCP61 business.
  • Legal Dispute with Intel:
    • Prevents NVIDIA from building next-generation chipsets.
    • Expectation of continued growth through next year and beyond with current architecture.
  • Financial Guidance:

    • Revenue guidance accounts for supply constraints.

    • Operating expenses expected to decrease in Q1 and Q2 as new product bring-ups are completed.