Nvidia Cuts Sales Estimates by Half

Today, graphics chipmaker Nvidia said it expects its fourth-quarter sales to come in 40-50 percent lower than the $897.7 million it posted in the third quarter. That puts its revenue estimate between $448.9 million and $538.6 million — a huge drop from last year’s record-setting fourth-quarter sales of $1.2 billion. In its apparent desire to keep this information as close to the vest as possible, Nvidia will not hold a conference call today to discuss the estimates, does not provide a link to this release as part of its news page, and did not provide any numbers in the release announcing its grim forecast (I had to dig up old filings). All of which is in line with the company’s inability to be open about problems, as exemplified by its treatment of the faulty chips that have caused GPU failures for the owners of Dell, Apple and HP laptops.

Anyhow, Nvidia is not just sucking wind as a result of the economy. It has also engaged in some poor pricing decisions, releasing a chip that’s much more expensive than comparable AMD graphics chips. It had to take charges related to the manufacturing problem that caused the faulty laptop GPUs, too. And in a crummy economy, these types of mistakes can sink a business. Which is a shame, because Nvidia makes some really sweet silicon.

I can’t wait to see its Tegra chipset in smartphones or netbooks, and its ION platform that combines Intel’s Atom chip with an Nvidia GPU couldĀ make netbooks way more compelling for watching movies, web video and other visual content. However, with fierce GPU competition from AMD and a myriad of other firms introducing netbook chips, among them Qualcomm and Intel, Nvidia can’t afford to keep messing up.

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