NVIDIA Visits The Gallows (NVDA)

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Things have been bad for NVIDIA Corporation (NASDAQ: NVDA) for some time.  Unfortunately, they are not looking any better.  The company did not just lower its guidance.  Its guidance is so bad that it looked like a blind man in the batter’s box.

NVIDIA guided revenues for the fourth quarter ending January 25to a new lower level with a decline of 40% to 50% sequentially.  Thecompany blamed this on being on weakness inend-user demand and inventory reductions by NVIDIA’s channel partnersin the global PC supply chain.  In short, graphics processors andchipsets on the higher-end are not selling.

So what does this mean?  Based upon revenues of $897.6 millionfor the quarter ending on October 28, 2008, that would assign a newrevenue range of $448.8 million to $538.5 million for this current quarter.  Itis hard to believe that Thomson Reuters (First Call) is up this high,but that consensus estimate is listed as $805.51 million.

If you want to know how bad this is compared with a year-over-yearreading, let’s hope you are sitting down.  NVIDIA put up over $1.2billion in revenue for the quarter ending January 27, 2008.

We have noted how the sales ofsub-$500 and now sub-$400 PC’s is dragging the tech sector down.  Butthis forecast looks about as pretty as the remains of a 100 people who get hit by atrain in a narrow tunnel.  It is beyond ugly.

Jon C. Ogg
January 13, 2009