Company Lowers Financial Outlook for Second Quarter and Plans to Take One-Time
Charge for Certain Notebook Field Failures
SANTA CLARA, Calif., July 2 /PRNewswire-FirstCall/ -- NVIDIA Corporation
(Nasdaq: NVDA), the world leader in visual computing technologies, today
provided a business update for its second quarter ending July 27, 2008.
* Second quarter revenue and gross margin are expected to be lower than
guidance provided during its first quarter financial conference call held
May 8, 2008. Total revenue is now estimated to be from $875 million to $950
million. The estimated decrease in revenue and gross margin is due to several
reasons: end-market weakness around the world, the delayed ramp of a next
generation MCP, and price adjustments of our GPU products to respond to
competitive products.
* Separately, NVIDIA plans to take a one-time charge from $150 million to
$200 million against cost of revenue for the second quarter to cover
anticipated warranty, repair, return, replacement and other costs and
expenses, arising from a weak die/packaging material set in certain versions
of its previous generation GPU and MCP products used in notebook systems.
Certain notebook configurations with GPUs and MCPs manufactured with a certain
die/packaging material set are failing in the field at higher than normal
rates. To date, abnormal failure rates with systems other than certain
notebook systems have not been seen. NVIDIA has initiated discussions with its
supply chain regarding this material set issue and the Company will also seek
to access insurance coverage for this matter.
Regarding the notebook field failures, NVIDIA president and CEO Jen-Hsun
Huang stated:
"Although the failure appears related to the combination of the
interaction between the chip material set and system design, we have a
responsibility to our customers and will take our part in resolving this
problem. The GPU has become an increasingly important part of the computing
experience and we are seeing more interest by PC OEMs to adopt GPUs in more
platforms. Recognizing that the GPU is one of the most complex processors in
the system, it is critical that we now work more closely with notebook system
designers and our chip foundries to ensure that the GPU and the system are
designed collaboratively for the best performance and robustness."
Today's high performance notebooks are highly complex systems with extreme
thermal environments. The combination of limited thermal management and
frequent power cycling is particularly challenging for complex processors like
the GPU.
Huang added, "This has been a challenging experience for us. However, the
lessons we've learned will help us build far more robust products in the
future, and become a more valuable system design partner to our customers. As
for the present, we have switched production to a more robust die/package
material set and are working proactively with our OEM partners to develop
system management software that will provide better thermal management to the
GPU."
For more information about the one-time charge for notebook field
failures, please refer to NVIDIA's current report on Form 8-K dated July 2,
2008 filed with the Securities and Exchange Commission.
No conference call will be held in conjunction with this business update.
Additional commentary pertaining to the second quarter and the notebook field
failures will be available when NVIDIA reports its second quarter financial
results on August 12, 2008.
About NVIDIA
NVIDIA is the world leader in visual computing technologies and the
inventor of the GPU, a high-performance processor which generates
breathtaking, interactive graphics on workstations, personal computers, game
consoles, and mobile devices. NVIDIA serves the entertainment and consumer
market with its GeForce(R) products, the professional design and visualization
market with its Quadro(R) products, and the high-performance computing market
with its Tesla(TM) products. NVIDIA is headquartered in Santa Clara,
California and has offices throughout Asia, Europe, and the Americas. For more
information, visit http://www.nvidia.com.
Certain statements in this press release including, but not limited to,
statements as to: NVIDIA's second quarter results and the factors impacting
second quarter results; the one-time charge arising from the die/packaging
material set; notebook system failure rates; discussions with our supply
chain; use of insurance coverage; the design, manufacturing and performance of
future products and systems; and being a system design partner for our
customers are forward-looking statements that are subject to risks and
uncertainties that could cause results to be materially different than
expectations. Important factors that could cause actual results to differ
materially include: our reliance on third parties to manufacture, assemble and
test our products; design, manufacturing or software defects; the impact of
technological development and competition; changes in the global economy and
demand for our products before the end of our second quarter as well as other
factors detailed from time to time in the reports NVIDIA files with the
Securities and Exchange Commission including its Form 10-Q for the period
ended April 27, 2008. Copies of reports filed with the SEC are posted on our
website and are available from NVIDIA without charge. These forward-looking
statements are not guarantees of future performance and speak only as of the
date hereof, and, except as required by law, NVIDIA disclaims any obligation
to update these forward-looking statements to reflect future events or
circumstances.
Copyright (C) 2008 NVIDIA Corporation. All rights reserved. NVIDIA, the
NVIDIA logo, GeForce, Quadro, and Tesla are trademarks and/or registered
trademarks of NVIDIA Corporation in the U.S. and other countries. Other
company and product names may be trademarks of the respective companies with
which they are associated.
(Logo: http://www.newscom.com/cgi-bin/prnh/20020613/NVDALOGO)
SOURCE NVIDIA Corporation
Michael Hara, Investor Relations, +1-408-486-2511, mhara@nvidia.com, or Calisa
Cole, Corporate Communications, +1-408-486-6263, ccole@nvidia.com, both of
NVIDIA Corporation
