Nvidia admits GeForce FX 5800 ‘not successful’
Sales, income well down too
Nvidia last night announced disappointing results for the first quarter of its current fiscal year, 2004.
The chip maker admitted its NV30 chip - aka the GeForce FX 5800 - was "not a successful product", and confirmed that it would launch its replacement, the NV35, next week. The suggests Nvidia will indeed announce NV35 at the E3 show, to be held in Los Angeles on 13-16 May, as forecast.
Speaking during a post-announcement conference call, Nvidia CEO Jen-Hsun Huang said the NV35 will replace the NV30. The new chip is believed to be called the GeForce FX 5900. Pictures of the new board can be seen here.
Sales for the period were $405 million, down 30.5 per cent on Q1 2003, when Nvidia recorded sales of $582.9 million. Sales fell sequentially too, down 13.6 per cent on the previous quarter's $469 million worth of sales.
The most recent quarter's figure was below Wall Street's expectation of $410 million, according to FirstCall's poll.
Net income totalled $19.7 million (12 cents a share), down 61.3 per cent on the previous quarter's $50.9 million income (30 cents a share) and a whopping 76.3 per cent on the same period last year's figure of $83.2 million (47 cents a share).
Revenue from Nvidia's deal with Microsoft fell $43 million quarter over quarter. The company expects to get some of that back in the current quarter, but it's hard to see it given Xbox's recent price cuts.
Huang said Nvidia would begin producing a new GeForce FX chip, this time with IBM, which the company selected as a second manufacturing partner in March. Huang said the company has not yet decided how it intends to split production between IBM and its original foundry partner, TSMC, in the long run. TSMC will be producing NV35, he said.
Talk of the new GeForce FX, plus NV35, drove Nvidia's shares up 11 per cent in after-hours trading from $16.06 to $17.80. But that's still a very long way from 2002's high of around $70, when the company seemed unaffected by the downturn the rest of the semiconductor industry was experiencing.
Looking ahead, CFO Marv Burkett said the company expects revenue to rise by between 12 and 18 per cent in the second quarter. However, he admitted that gross margins in the second quarter may drop 1-2 per cent. Nvidia is putting in place cost-cutting measures, he said. ®