Nvidia sees record profits, serious growth

[Gregster]

Nvidia's latest financial figures are out, and if the global market is in a slump somebody forgot to tell the green camp: the company has shown impressive growth, but it's not in the PC market.

According to the company's quarterly earnings report, published late yesterday, its year-on-year revenue has hit a record high of $4.28 billion - 7.1 per cent up on last year's figures - despite a dip quarter-on-quarter that saw it end the year on a 8.1 per cent sequential slump. The company's quarterly net profit figure is the stand-out headliner, however, growing 50 per cent year-on-year to $174 million - despite a stock repurchase programme that saw the company spending $100 million in the last financial quarter and a further $46.9 million in dividends to shareholders, resulting in a dip from Q3's $209 million profit figure.

Nvidia's secret to riding out the flagging PC market is, if you hadn't guessed, Tegra. The company's system-on-chip processor division, responsible for one of the most popular chips for Android - and, more recently, Windows RT - tablets, grew its revenue 50 per cent in 2012 hitting a high of $540 million. While that's only a small fraction of the company's entire $4.28 billion turnover for the year, that figure is only likely to grow further in the coming years. Nvidia's GPU division, meanwhile, continues to dominate Nvidia's earnings, pulling in $3.2 billion in revenue for the financial year.

Speaking in an earnings call with press and analysts, Nvidia co-founder Jen-Hsun Huang was clear about his company's focus on growing its Tegra platform to account for a larger proportion of the company's revenue - a plan which, he claims, is going well. 'At this point we have more design wins [with Tegra 4] than we had at this point with Tegra 3,' Huang claims. 'You also heard we are now sampling our 4G LTE modem, and this is a pretty large market. It's still early in the overall modem market. It's about 150 million units large, projected this year, [and] growing about 50% per year. The overall connected device market is probably about one billion, north of a billion units.

'So there is a lot of LTE 4G modems that need to be shipped. And this is really the first year where we have the ability to engage the market. So we are really super excited about it. We are going to engage it very very hard. And we are sampling modems around the world now. And so those are good growth indicators for Tegra 4. In the first quarter, always we ramp down Tegra 3 as we ramp up Tegra 4. And hopefully in the future as we get more and more into lower-end devices where the lifecycle is a little longer, this transitional effect would be less pronounced. But this is something we expected and is something that will transition into Tegra 4 as fast as we can.'

With Tegra 4 expected to ship in volume in July this year, Huang was doing his best to push the technology ahead of rival devices from ARM's other licensees, like Qualcomm's currently-shipping Snapdragon S4 Pro or Samsung's upcoming eight-core Exynos Octa. '[Soon] you will see performance evaluations of Tegra 4, and I think you’ll be quite pleased with them. Tegra 4 is many times higher performance than Tegra 3 in many areas and it’s designed to be very high performance. There’s a lot of confidence in why we can deliver that performance leadership. We said that about Tegra 3 and I think we delivered on that. This is an area that we’re quite good at. So, whether it’s CPU performance or GPU performance or camera performance, these are three areas that we’ve made big breakthroughs on.'

That's not to say Nvidia is moving away from graphics, of course. During the call, Huang described Kepler as 'the best GPU we've ever built - the best GPU the industry has ever built,' promising to bring the same chipset to its Quadro workstation line as quickly as possible. As for its consumer line, Huang claimed that the explosion in free-to-play titles will help drive growth there too: 'We have always said that PC gaming is vibrant. We have said that PC gaming is in fact growing, and the reason for that is because the PC platform is open and it allows for a lot of innovation, not only for technology but also for business models.

'One of the most important new growth dynamic has to do with free to play. Free to play is really a wonderful business model. So ,these free to play platforms are fabulous for PCs - and it attracts new gamers.'

Naturally, nobody at Nvidia would be pushed on unannounced products or next-generation release schedules, but from the company's financials the future certainly looks bright.

Crazy GPU prices but they are doing something right.

 

[DarrenM343]

Interesting. Wonder why is the share price not following the general market higher ? Same price today as 2009. Peaked at $25 a share, currenty at 12.5. Price down 2% ATM

 

[Jokester]

Could be that the market already expected this kind of performance if the price hasn't budged.

 

[Suarez7]

Crazy GPU prices but they are doing something right.

Good marketing and obviously a very well ran business model. nVidia ftw, wish I had the brains to work there!

 

[Space Monkey]

(dons flame suit) Better drivers (runs off and hides)

Seriously though, good work Nvidia

 

[DarrenM343]

Could be that the market already expected this kind of performance if the price hasn't budged.

could be, but record profits is not exactly priced into the current seemingly low price. Suspect the market still has some longer term concerns. Might have huge debt too.

Long term chart, the price on the right is the current price.

 

[Rusty0611]

Good to see some nVidia propaganda . This forum is becoming dangerously one sided.

 

[Jokester]

Good to see some nVidia propaganda . This forum is becoming dangerously one sided.

Depends on how impartial you are I guess.

 

[wazza300]

I should thinkso the prices of their cards!!

 

[Gregster]

My point for posting was to show that even in recession/slump, a company that should also be feeling it, isn't showing it.

Good marketing obviously pays off and having Tegra

 

[Rofflay]

There goes your hopes of a cheap Titan

Huge prices and profits to match.Not that great for consumers looking for another 8800 GT.

 

[wazza300]

I wonder how amd did? better worse? they shifted a lot of cards

 

[Tonester0011]

I'd like to know how well AMD did also
Good news for Nvidia though.

 

[Gregster]

I wonder how amd did? better worse? they shifted a lot of cards

I'd like to know how well AMD did also
Good news for Nvidia though.

Don't hate me.

Jan 30 - Fitch Ratings has downgraded the following ratings for Advanced
Micro Devices Inc.'s (NYSE: AMD):

--Long-term IDR to 'CCC' from 'B';
--Senior unsecured debt to 'CCC/RR4' from 'B/RR4'.

Fitch's actions affect approximately $2.1 billion of total debt.

The ratings reflect Fitch's expectations that negative free cash flow (FCF) in
2013 will drive cash below AMD's target level and potentially approach the
company's minimum operating level. Beyond the near-term, Fitch believes a strong
end market recovery and adoption of AMD's new products will be required to
preserve cash during the company's multi-year transformation.

Fitch expects negative revenue growth in the mid- to high-teens for 2013, driven
by weak consumer spending, robust tablet penetration and lingering excess
channel inventory anticipated for the first half of the year. Revenue growth
could turn positive in the back half of 2013, assuming strong sales of AMD's new
products.

Negative revenue growth will drive profitability lower in 2013, despite
restructuring actions expected to reduce quarterly operating expenses to $450
million by the September 2013 quarter. Fitch expects negative FCF of $250
million to $450 million in 2013 from lower profitability levels and inventory
builds related to new product ramps.

AMD's cash usage will be amplified by cash payments to GLOBALFOUNDRIES (GF) for
amendments to the wafer supply agreement (WSA), including $215 million in fiscal
2013 and $200 million at the beginning of fiscal 2014. These cash outflows could
be partially offset by proceeds from AMD's proposed office building
sale-and-leaseback transaction.

AMD is planning first half of 2013 launches of system-on-a-chip (SoC)
accelerated processors for ultra-low power mobility and tablet products and
solid revenue growth in the second of 2013 from ramps of a broad set of design
wins. Delays to these launches, the expected market recovery, or product sales
ramps would exacerbate Fitch forecasts.

Credit protection measures will remain volatile, due to variations in
profitability. Fitch estimates total leverage was 4.2x for 2012 but may approach
10x in 2013. Fitch estimates interest coverage was 2.8x for 2012 but could fall
to 1x in 2013.

AMD's transformation targets higher-growth markets, including ultra-low-power
mobility, high-density servers and semi-custom embedded products. Given AMD's
traditional PC markets represent the vast majority of sales, achieving the
company's target of 40%-50% of sales from higher-growth markets will require a
number of years.

Fitch believes liquidity was sufficient as of Dec. 29, 2012, and consisted of
$1.18 billion of cash and cash equivalents, including $181 million of long-term
marketable securities. Fitch expects negative FCF of $250 million to $450
million for the current year, pressuring liquidity by the end 2013. The company
has a stated target cash level of $1.1 billion and minimum operating cash level
of $700 million.

Total debt was $2.1 billion at Dec. 29, 2012 and consisted of:

--$580 million of 6% senior unsecured convertible notes due 2015;
--$500 million of 8.125% senior unsecured notes due 2017;
--$500 million of 7.75% senior unsecured notes due 2020;
--$500 million of 7.5% senior unsecured notes due 2022;
--Approximately $25 million of capital leases.

AMD's ratings continue to be supported by:

--Low capital intensity as a fabless semiconductor maker, resulting in a
stronger FCF profile;

--Reduced revenue breakeven profitability, pro forma for the completion of
current restructuring initiatives;

--The company's role as the only current viable alternative microprocessor
supplier to Intel, although Fitch expects new entrants in certain markets over
the intermediate term.

Fitch's concerns center on:

--Limited financial flexibility, given cash usage trends;

--AMD's modest share of the overall PC market and limited share in rapidly
growing small-form factor mobility products;

--High R&D intensity as a fabless semiconductor maker.

Further negative rating actions could be taken if the penetration of new APU
products is lackluster, resulting in revenue declines and cash usage beyond
2013.

Positive rating actions could occur if:

--FCF exceeds the upper end of Fitch's base case range;

--Strong adoption of new products, portending solid revenue growth and positive
FCF in 2014.

AMD's Recovery Ratings (RRs) reflect Fitch's belief that the company would be
reorganized rather than liquidated in a bankruptcy scenario. This is given
Fitch's estimates that AMD's reorganization value of approximately $1 billion
exceeds a projected liquidation value of $682 million.

To arrive at a reorganization value, Fitch assumes a 4x reorganization multiple
and applies it to its estimate of distressed operating EBITDA of $260 million,
which covers estimated annual fixed charges, resulting in an adjusted
reorganization value of $939 million after subtracting administrative claims.

Fitch estimates the approximately $2.1 billion of unsecured claims recover
approximately 45%, resulting in an RR of 'RR4'.

 

[Tonester0011]

Forgot AMD has that CPU dustbin attached to it
Any breakdown for just the GPUs?

 

[Gregster]

Forgot AMD has that CPU dustbin attached to it
Any breakdown for just the GPUs?

I looked for some good news and looked for GPU sales only but no go sorry Hopefully someone else can find it.

 

[wazza300]

just think if they didn't buyout ati a few years ago,they would be dead in the water now

 

[Martini1991]

That's what happens when you can a mid range card into a high end card and turn huge profit

 

[Gregster]

That's what happens when you can a mid range card into a high end card and turn huge profit

Ooooooo, you had to



Ohhh and I always use Reuters for news.

http://www.reuters.com/finance/stocks/companyNews?symbol=AMD

 

[CAT-THE-FIFTH]

Don't hate me.

So why are you bringing AMD into this?? It is getting really tiresome that,that we have a million threads taking the **** out of AMD. Isn't one enough already?? We all know is AMD is doomed and there are a million threads in the CPU section about it.

I thought the GPU section would escape,but sadly it has spread.

It seems enthusiasts are more worried about investment advice nowadays than the actual products.

Moreover:

http://www.theregister.co.uk/2013/02/14/nvidia_q4_f2013_numbers/

GPU sales are down.

In the just-complted quarter, GPU sales were up 7.1 per cent compared to the year-ago period when the market was anxiously awaiting the launch of the "Kepler" family of GPUs. GPU sales were down 6.9 per cent sequentially, which indicates that pent-up demand for Kepler-based machines is waning a bit.

It is Tegra which is the main winner here,plus the GPU sales include the Tesla cards,which have shipped in large numbers to people like ORNL.

Lets add to the doom predictions then:

http://www.anandtech.com/show/6751/amd-reiterates-2013-gpu-plans-sea-islands-beyond

No new AMD high-end cards,until Q4 2013. In before the chants of AMD is screwed,etc.

However,if you read the article,an interesting piece of info is there.