Nvidia warns on Q4 Profits Thanks To HDD Shortage

If you've paid attention to quarterly earnings reports from the major computer OEMs, you've likely noticed that the hard drive shortage this fall had an impact, but not a disastrous one. Companies like Intel reported that manufacturer inventories were substantially affected as company's held off on restocking to see what prices would do, but net sales only fell modestly.

The GPU market, on the other hand, seems to have taken a hit. Nvidia has stated that its Q4 results were hurt by the hard drive shortage, something AMD also mentioned in its Q4 results. We didn't break it out initially -- AMD's overall GPU results were fairly decent -- but in the wake of NV's statements it's worth revisiting.

The company has cut its profit forecast by ~12 percent, from $1.06B in sales for the quarter down to $950 million. The stated reasons are the aforementioned HDD shortage as well as "the Tegra 2 mobile business declined more rapidly than expected, ahead of devices based on the Tegra 3 processor ramping into production in the first quarter of calendar-year 2012."

Both impacts are a bit surprising given NV's previous guidance. During the company's last conference call, CEO Jen-Hsun Huang indicated that he thought the HDD shortage situation would be a non-issue, while talking up momentum for Tegra 3 and Tegra 2.   One point the CEO hammered several times throughout the call is that Tegra 3 had more design wins going into this quarter than Tegra 2 ever had. If that's true, Tegra-related revenue will start to pick up again once more phones and tablets start shipping with the chip.

What Do Hard Drives And GPUs Have In Common?

The fact that an HDD shortage would impact NV's GPU sales is testament to just how much of the industry is driven by integrated graphics. Ten years ago, when only rock-bottom systems shipped with integrated graphics, a discrete GPU was still standard in the majority of configurations. Today, GPUs are a value-added component. As a result, manufacturers hurt by rising HDD prices, compensated by shipping systems with integrated graphics.

The long-term discrete GPU attach rate has been stable for years, but the trend is one reason why NV has pumped so much money into driving products like Tesla and Tegra. The slide below shows the company's changing revenue -- note that "Q3 2012" refers to Nvidia's fiscal year. The calendar period referred to as the fourth quarter of 2011 is actually Nvidia's Q4 2012.

Integrated GPU sales in lime green, Tesla/Quadro in Teal, Tegra in "light urple" (bonus if you get the reference)

The good news is that both of the factors that've hit NV's revenue should ease off in the first quarter. We expect to see more Tegra 3 design wins announced at Mobile World Congress in late February, while the hard drive shortage will gradually improve throughout the year. We should also hear more about Kepler, and possibly NV's "Tegra 3+" solution (think Tegra 3 on 28nm) in the weeks ahead.
Via:  Nvidia
JOliver 2 years ago

HDD shortage has only a small amount to do with this. Apple sold 26% more macs last quarter. Microsoft said in their earnings calls that business demand was strong while consumer demand was weak. We all know laptops are now outselling desktops.

Second reason is that Tegra2 was flying off the shelf in all the ipad killers. Tegra3 will fly off the shelf in the next generation of ipad killers.

dangerrenegade 2 years ago

Well a $950 billion dollar profit is not bad, considering that AMD is losing money at this point.

cowboyspace 2 years ago

Amd will get some back with its 7970 and 7950  GPU :) and its sad that nvidia stayed behind with the delay of kepler yay..Amd takes the lead :-p

dangerrenegade 2 years ago

Well, Kepler is really just a stepping stone. Even if Nvidia falls behind in the short term I think they'll blow away the competition with Maxwell.

cowboyspace 2 years ago

wait  for maxwell then  hehehehehhe

AKwyn 2 years ago

[quote user="DangerRenegade"]

Well, Kepler is really just a stepping stone. Even if Nvidia falls behind in the short term I think they'll blow away the competition with Maxwell.


I have to agree, I'll truly be surprised if it's GTX 600/700 series turn out to be a disapointment. The push towards Terga is understandable since the whole market is assuming that tablets are going to be the future due to the hard drive shortage pushing PC prives up; they're not far from the apple but I still don't think Tablets can completely replace a PC due to the various differences.

dangerrenegade 2 years ago

The hard drive shortage is really only affecting people who buy PC's from the big companies such as HP (a lot of people). People who stick to building themselves can still find great prices on drives. As cool as tablets are (I have one), they are no replacement for a desktop PC. I can't exactly get immersed into the world of Skyrim on an iPad, now can I?

I really think tablets and PC's are different markets. Yes, they may cannibalize some of the sales of laptops from people who really didn't need a laptop (or another laptop), but they are completely different experiences.

The PC market will be around for a very, very long time.

MBernard1 2 years ago

That's $950 million not 950 billion. And thats in sales, not in profits.

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