It wouldn’t be February if we didn’t hear the Q4 FY14 earnings from NVIDIA! NVIDIA does have a slightly odd way of expressing their quarters, but in the end it is all semantics. They are not in fact living in the future, but I bet their product managers wish they could peer into the actual Q4 2014. No, the whole FY14 thing relates back to when they made their IPO and how they started reporting. To us mere mortals, Q4 FY14 actually represents Q4 2013. Clear as mud? Lord love the Securities and Exchange Commission and their rules.
The past quarter was a pretty good one for NVIDIA. They came away with $1.144 billion in gross revenue and had a GAAP net income of $147 million. This beat the Street’s estimate by a pretty large margin. As a response, trading of NVIDIA’s stock has gone up in after hours. This has certainly been a trying year for NVIDIA and the PC market in general, but they seem to have come out on top.
NVIDIA beat estimates primarily on the strength of the PC graphics division. Many were focusing on the apparent decline of the PC market and assumed that NVIDIA would be dragged down by lower shipments. On the contrary, it seems as though the gaming market and add-in sales on the PC helped to solidify NVIDIA’s quarter. We can look at a number of factors that likely contributed to this uptick for NVIDIA.
Quarter Down but Year Up
Yesterday NVIDIA released their latest financial results for Q4 2012 and FY2012. There was some good and bad mixed in the results, but overall it was a very successful year for NVIDIA.
Q4 saw gross revenue top $953.2 million US with a net income of $116 million US. This is about $53 million less in gross revenue and $62 million down in net income as compared to last quarter. There are several reasons as to why this happened, but the majority of it appears to be due to the hard drive shortage affecting add-in sales. Simply put, the increase in hard drive prices caused most OEMs to take a good look at the price points of the entire system, and oftentimes would cut out the add-in graphics and just use integrated.
Tegra 3 promises a 50% increase in revenue for NVIDIA this coming year.
Two other reasons for the lower than expected quarter were start of the transition to 28 nm products based on Kepler. They are ramping up production on 28 nm and slowing down 40 nm. Yields on 28 nm are not where they expected them to be, and there is also a shortage of wafer starts for that line. This had a pretty minimal affect overall on Q4, but it will be one of the prime reasons why revenue looks like it will be down in Q1 2013.
Q4-2012 In a Nutshell
Tis the reporting season. Yes, that time of year when some of the major players in the computing world get together and tell us all how well they did this past quarter. Ok, so they do not necessarily get together to announce results, but they sure time them that way. Today was AMD’s turn (and Apple’s), and the results were not nearly as positive as what Intel had to offer a few days ago.
Q4 2011 was flat in terms of revenue as compared to Q3. The company had gross revenue of $1.69 billion and had a net income loss of $177 million. That net income is not necessarily a bad result, but more on that later. Margins rose to 46%, which is still a far cry from Intel’s 65% for the past quarter. Gross revenue was up 2% from last year, which considering the marketplace and Intel’s dominance, is a solid win for AMD.
When we start talking about non-GAAP results, AMD had a net income of $138 million. The difference between those two numbers (a loss vs. a nice profit) is that the loss came from one time writeoffs. AMD has lowered its stake in GLOBALFOUNDRIES to 8.8%, and in so doing incurred a hefty charge. This is not so much money lost as it is lost value in the company.
I got your $13.9 Billion over here...
Intel had a record quarter. Are we tired of hearing that yet? I guess that depends on who a person is investing with. Earlier this quarter Intel warned that their results could be negatively affected by the current hard drive shortage that we are experiencing. Apparently, this was a factor, but it did not stop Intel from still having a record quarter.
Q4 2011 turned out to be gangbusters for Intel. They reported gross revenue of $13.9 billion, which is significantly higher than the expected $13.74 billion analysts were predicting. Net income came in at $3.4 billion with an impressive 65.5% gross margin. The overall year was also record setting at $54 billion gross revenue and $12.9 billion net income. For comparison, AMD has a gross revenue of about $6.8 billion and a net income of around $300 million. 2010 was a record year for Intel in that they surpassed $40 billion in revenue for the first time in the company’s history, and this year saw revenue over $10 billion higher. Intel is certainly hitting their stride, and they do not look to slow down anytime soon.