Feeds

Long product cycle times to impact Nvidia Q4 earnings

Analyst forecast

  • alert
  • submit to reddit

Nvidia's Q4 results, due later today, will reveal reduced margins - and a lower income as a result - thanks to long product cycle times at its main foundry partner, TSMC.

So claims a report from US investment house Pacific Crest Securities (PCS). "Nvidia's low gross margin over the past two quarters (27 to 28 per cent versus a 33.3 per cent average since 1999) has been the result of long product cycle times at... TSMC," Pacific Crest Securities analyst Michael McConnell writes.

"The number of mask steps required to fabricate the company's NV3x family of graphics processors led to cycle times in excess of 75 days, compared to a normalised 60-65 days in previous product generations," he adds.

The upshot, says McConnell, are earnings of just 11 cents a share on sales of $485 million. That's better than the previous quarter's four cents a share, but well below Q4 2003's 30 cents and Q4 2002's 43 cents.

The good news is that Nvidia's NV4x series of graphics chips will see better cycle times, the PCS report suggests, thanks to the involvement of a second foundry partner, IBM.

Next quarter, PCS reckons Nvidia will earn ten cents a share on sales of $480 million. This represents a lowering of estimates thanks to the inevitable post-Christmas lull. ®

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Mobile application security vulnerability report
The alarming realities regarding the sheer number of applications vulnerable to attack, and the most common and easily addressable vulnerability errors.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.