Nvidia books $1.32b inventory charge as PC market slows
(2022/08/08)
- Reference: 1659968411
- News link: https://www.theregister.co.uk/2022/08/08/nvidia_banks_132bn_charge/
- Source link:
The slowdown in retail spending is taking a toll on Nvidia, which is reporting hefty double digit declines in its Gaming unit, and charges of $1.32 billion, primarily related to inventory and the wider economy.
The GPU giant today reported a 3 percent rise in turnover to $6.7 billion for [1]Q2 of its fiscal 2023 ended 31 July [PDF] and the direction of travel is clear for the group as this revenue figure was down 19 percent on the prior quarter.
The gaming division was the main anchor dragging growth, plunging by a third year-on-year to $2.04 billion, and 44 percent lighter sequentially.
[2]
"Our gaming product sell-through projections declined significantly as the quarter progressed," said Jensen Huang, CEO of Nvidia. “As we expect the macroeconomic conditions affecting sell-through to continue, we took actions with our Gaming partners to adjust channel prices and inventory.”
[3]
[4]
“Nvidia has excellent products and position driving large and growing markets. As we navigate these challenges, we remain focused on the once-in-a-generation opportunity to reinvent computing for the era of AI," he added.
[5]PC shipments have declined in the first two quarters of this year, mostly on the back of consumers and the education sector slowing purchases of Chromebook and laptops for personal use. Work machines are continuing to grow in Europe and North America.
The return of GPUs on sale may be tech world's monkey's paw of 2022 [6]READ MORE
Yet the other major part of Nvidia's business continues to head in the right direction for company executives: the Data Center division was up 1 percent quarter-on-quarter to $3.81 billion, or up 61 percent year-on-year.
Nvidia said this was a "record" for the unit but was "somewhat short of the company’s expectations, as it was impacted by supply chain disruptions."
[7]
Professional Visualization was down 20 percent on the prior quarter and down 4 percent year-on-year to $500 million; the Automotive division was up 59 percent on Q1 and up 45 percent year-on-year to $220 million; and OEM & Other was down 66 percent annually and down 12 percent sequentially to $130 million.
Nvidia said the full and final audited Q2 results are expected to show a $1.32 billion of charges, mostly for inventory and related reserve, “based on the revised expectations for future demand.”
[8]VMware's subscriptions start at 16 cores, prices won't be made public
[9]Congress finally passes $52b subsidies for chip fabs on US soil
[10]You can liquid cool this Linux laptop to let the GPU soar
[11]Arm still jewel in crown as parent SoftBank nurses record $23.5b hit
"The significant charges incurred in the quarter reflect previous long-term purchase commitments we made during a time of severe component shortages and our current expectation of ongoing macroeconomic uncertainty,” said Colette Kress, EVP and CFO of Nvidia.
"We believe our long-term gross margin profile is intact. We have slowed operating expense growth, balancing investments for long-term growth while managing near-term profitability. We plan to continue stock buybacks as we foresee strong cash generation and future growth," she said.
The Q2 results will be released on 24 August. ®
Get our [12]Tech Resources
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[5] https://www.theregister.com/2022/07/12/global_pc_market_gartner/
[6] https://www.theregister.com/2022/07/07/global_gpu_shortage/
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YvEzIGe5kEkuz8Hsq19OMAAAAAY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2022/07/29/vsphere_plus_prices_not_public/
[9] https://www.theregister.com/2022/07/28/house_chips_act_passes/
[10] https://www.theregister.com/2022/07/18/liquid_cooled_laptop/
[11] https://www.theregister.com/2022/08/08/arm_softbank_q1/
[12] https://whitepapers.theregister.com/
The GPU giant today reported a 3 percent rise in turnover to $6.7 billion for [1]Q2 of its fiscal 2023 ended 31 July [PDF] and the direction of travel is clear for the group as this revenue figure was down 19 percent on the prior quarter.
The gaming division was the main anchor dragging growth, plunging by a third year-on-year to $2.04 billion, and 44 percent lighter sequentially.
[2]
"Our gaming product sell-through projections declined significantly as the quarter progressed," said Jensen Huang, CEO of Nvidia. “As we expect the macroeconomic conditions affecting sell-through to continue, we took actions with our Gaming partners to adjust channel prices and inventory.”
[3]
[4]
“Nvidia has excellent products and position driving large and growing markets. As we navigate these challenges, we remain focused on the once-in-a-generation opportunity to reinvent computing for the era of AI," he added.
[5]PC shipments have declined in the first two quarters of this year, mostly on the back of consumers and the education sector slowing purchases of Chromebook and laptops for personal use. Work machines are continuing to grow in Europe and North America.
The return of GPUs on sale may be tech world's monkey's paw of 2022 [6]READ MORE
Yet the other major part of Nvidia's business continues to head in the right direction for company executives: the Data Center division was up 1 percent quarter-on-quarter to $3.81 billion, or up 61 percent year-on-year.
Nvidia said this was a "record" for the unit but was "somewhat short of the company’s expectations, as it was impacted by supply chain disruptions."
[7]
Professional Visualization was down 20 percent on the prior quarter and down 4 percent year-on-year to $500 million; the Automotive division was up 59 percent on Q1 and up 45 percent year-on-year to $220 million; and OEM & Other was down 66 percent annually and down 12 percent sequentially to $130 million.
Nvidia said the full and final audited Q2 results are expected to show a $1.32 billion of charges, mostly for inventory and related reserve, “based on the revised expectations for future demand.”
[8]VMware's subscriptions start at 16 cores, prices won't be made public
[9]Congress finally passes $52b subsidies for chip fabs on US soil
[10]You can liquid cool this Linux laptop to let the GPU soar
[11]Arm still jewel in crown as parent SoftBank nurses record $23.5b hit
"The significant charges incurred in the quarter reflect previous long-term purchase commitments we made during a time of severe component shortages and our current expectation of ongoing macroeconomic uncertainty,” said Colette Kress, EVP and CFO of Nvidia.
"We believe our long-term gross margin profile is intact. We have slowed operating expense growth, balancing investments for long-term growth while managing near-term profitability. We plan to continue stock buybacks as we foresee strong cash generation and future growth," she said.
The Q2 results will be released on 24 August. ®
Get our [12]Tech Resources
[1] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001045810/8cff3ea7-8e46-446c-b2bc-df1acad569ef.pdf
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YvEzIGe5kEkuz8Hsq19OMAAAAAY&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[5] https://www.theregister.com/2022/07/12/global_pc_market_gartner/
[6] https://www.theregister.com/2022/07/07/global_gpu_shortage/
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YvEzIGe5kEkuz8Hsq19OMAAAAAY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2022/07/29/vsphere_plus_prices_not_public/
[9] https://www.theregister.com/2022/07/28/house_chips_act_passes/
[10] https://www.theregister.com/2022/07/18/liquid_cooled_laptop/
[11] https://www.theregister.com/2022/08/08/arm_softbank_q1/
[12] https://whitepapers.theregister.com/
Anonymous Coward
s/gaming/cryptocurrency/g
devin3782
I'm sure your products are excellent Mr Jensen, the problem is they're simply too expensive
b0llchit
Not only expensive as cards but also crippled for cryptocurrency use and major, major expensive in energy usage with electricity prices going through the roof.
Steve Kerr
Yup - charging significantly over MSRP whilst not actually dropping the prices to lower than the original MSRP for cards which are a couple of years old now.
So yeah, you're stuck with inventory because you're unwilling to drop the prices to something more acceptable to the market.
It's why I'm still using an 8 year old graphics card because I'm not paying those prices for yesterdays technology. Charging a premium for bleeding edge I can understand.
AMD have seen the writing on the wall and are starting to drop prices, Nvidia have their heads in the clouds still riding the crypto boom (and bust)
Which major console is nvidia supplying the graphics subsystem for again?
And meanwhile in PC-land, those seeking "value" all are basically forgotten. The company that releases a good medium range card is the one that will take the market.