Archive notice: This article was originally published on July 4, 2008. Links and embedded videos are preserved as part of the historical record.
Nvidia expects lower revenue and gross profit for the second quarter of its 2008/2009 fiscal year, ending July 27, 2008, than in the first quarter of 2008. While total revenue in that quarter was $1.15 billion, Nvidia expects second-quarter revenue of between $850 million and $950 million.
Several factors are responsible for the lower revenue forecast. These include a worldwide slowdown in consumer markets, the delayed launch of a new media and communications processor (MCP), and price adjustments to GPU models because of stronger competition.
Separately, Nvidia will make a one-time provision of $150 million to $200 million to cover warranty, repair, return, replacement and other costs that may arise from material problems in the packaging of earlier GPU and MCP versions. Certain configurations are experiencing defects more frequently than usual.
With this provision, Nvidia will cover all expenses arising from warranty claims, repairs, shipping and replacement costs for the notebooks, among other things. The increased failure rates occur only in certain notebook product lines. Nvidia is currently in discussions with its suppliers and is examining whether the losses are covered by insurance.
“Although the defects that have occurred were caused by the chip material used and the system design, Nvidia recognizes its responsibility to its customers and will therefore do everything necessary to resolve this problem,” said Jen-Hsun Huang, President and CEO of Nvidia.
“More and more OEM manufacturers are using GPUs in their systems, so these components are also playing an increasingly important role in the PC market. The GPU is one of the most complex system processors. We must therefore work with notebook and chip manufacturers to ensure that all systems equipped with a GPU operate as stably and powerfully as possible.”
Further information about Nvidia’s provision to address the notebook problems is available in the Form 8-K report dated July 2, 2008.
Nvidia will provide additional information about the quarterly results and the notebook problems in its final report for the second quarter of fiscal year 2008/2009, scheduled for release on August 12, 2008.
