On 12 August 2010 NVIDIA (NASDAQ: NVDA) will report its results for fiscal 2011's second quarter, which will end on 1 August 2010. However, NVIDIA has already announced that Revenue in the quarter will be much less than the guidance the company provided on 13 May 2010.
The guidance, issued in conjunction with first quarter results, had
been to expect second-quarter Revenue 3-to-5 percent below the first
quarter's $1.0 billion. These percentages translated into a Revenue
guidance range of $950 million to $970 million.
NVIDIA's press release
dated 28 July 2010 states that Revenue is now estimated at only $800
million to $820 million. In other words, Revenue in the second quarter
will be 18 to 20 percent less than Revenue in the first quarter.
blamed the revenue shortfall on "increased memory costs and economic
weakness in Europe and China [... that ...] led to a
greater-than-expected shift to lower-priced GPUs and PCs with integrated
NVIDIA did not identify how the revenue shortfall would affect its bottom line, but we have made a (very) rough estimate.
In our "look-ahead"
for NVIDIA's current quarter, posted 1 July 2010, we used the midpoint
of the company's original Revenue guidance to forecast earnings of $120
million ($0.20 per share).
We have now revised our Income
Statement model to reflect NVIDIA's lower estimates for Revenue. We
also reduced the expected Gross Margin from 46.5 percent to 41.5 percent
because slumping sales often lead to production and distribution
inefficiencies. The 41.5-percent figure is just a guess.
We assume there will be some minor savings in revenue-dependent marketing costs.
Leaving most other assumptions unchanged, our new estimate for the quarter is Net income of $35 million ($0.06 per share).
Please click here
to see a full-sized, normalized depiction of the projected results next
to NVIDIA's quarterly Income Statements for the last couple of years.
Please note that our organization of revenues, expenses, gains, and
losses, which we use for all analyses, can and often does differ in
material respects from company-used formats. The standardization
facilitates cross-company comparisons.
Full disclosure: Long NVDA at time of writing.