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nVidia third quarter results 2011, bean counters almost done

KitGuru’s portfolio of investments is as broad as it is eclectic. We monitor the markets and look for bargains. That involves analysing patterns. For example, while roller coasting from quarter to quarter over the past 2 years, AMD has managed to create somewhat steady upward pressure on its stock price. So what about Nasdaq darling nVidia ?

In the year or so after AMD bought ATI, chaos reigned. Bringing the two companies together was more work than anyone imagined and almost every part of the newly combined company suffered.

Although AMD bought ATI, on the way in it was ATI that had the stronger of the roadmaps. While AMD was still struggling with the original Phenom and considering selling triple core processors, ATI had the 4000 and 5000 series products well underway.

So many people were sacked from the newly combined organisation that communication levels reached an all time low and everyone was signing up for CV improvement courses.

Against that unhappy backdrop, nVidia launched its strongest line up ever with the world’s first DX10 products, the legendary 8000 series.

Almost overnight, nVidia went from being a company that turned over $1 billion a year to being a company that turned over $1 billion a quarter. By 2008, nVidia was hammering in over $4 billion a year.

Since then, the market has become much more competitive.

On 30th August this year, nVidia posted second quarter revenue of $811 million. Although that was up 4% on the same period in 2009, it was accompanied by a loss of $140 million.

Jen Hsun seems to have successfully negotiated the worst of nVidia's results, now the question becomes with Fermi firing on most barrels, can he steer the share price back to the ~$19 seen at the start of 2010

Over the past 2 weeks, nVidia’s nerdiest bean counters have been totalling up the results of the GTX460 launch. Looking at the smiles on the faces of nVidia’s local representatives, it seems that Q3 might generate ‘banging results’.

OK, all well and good, so where is the bar?   What level of result will nVidia need to post in order to show that it is well back on track?

  • Up to $850m: Got to be considered some kind of failure. With the advent of the awesome GTX460, nVidia must be expecting to boost past this figure
  • From $850m to $1Bn: Decent result. Not enough to start ordering fireworks, but good enough
  • $1Bn to $1.1Bn: Now we’re talking. nVidia posting over $1Bn would show that the company has really returned to winning ways and that money available to (a) add more titles to TWIMTBP and (b) run more advertising
  • Over $1.1Bn: Phenomenal. If nVidia turned a miserly $811 in Q2 to a monstrous +$1.1Bn in Q3, with profitability, then you’d have to say that the boys are well and truly back in town

KitGuru says: While the GTX480 and 470 cards were slow starters and the GTX465 was a complete no-hoper, the GTX460 has changed the game considerably. The advent of the GTX580 and the GTX570 and GTX590 variants that will follow, look very strong. Will the Radeon 6970 be able to take the lead and enhance AMD’s share price at the same time?  We’ll know soon enough!

Comment below or ping us your predictions in the KitGuru Forum.

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