CEO
– Another record quarter and record year.
– [Income Figures]
– [New Products/Initiatives]
– [CUDA as a first step towards Heterogenous Computing and also interesting for consumer workloads]
– [New Products/Initiatives including Hybrid SLI]
– [Growth percentages, MCP was the lowest at +7%]
– [Mental Images & Ageia acquisitions]
– Very satisfied with our strategic position heading into Fiscal 2009.
CFO
– Differences between GAAP and non-GAAP is stock compensation and Mental Images charges.
– Notebook and MCP were up slightly at 1 and 2% sequentially.
– Desktop was up 69% year-over-year.
– Consumer business [mostly handheld] declined.
– Some cost issues with the 8800 GT during the quarter which we hope to resolve in the next two quarters.
– The revenue for Mental Images during the quarter was less than one million dollars.
– Employees up 902 year-over-year, two thirds of that being R&D.
– Cash was down $43M quarter-over-quarter. $178M stock repurchase.
– Cash flow a little bit over $250M in the quarter.
– Capital expenditures were $70M in Q4.
Outlook
– We expect revenue in Q1 to be better than seasonal.
– We believe revenue will be slightly down.
– We will get back on track to improving gross margins, will be flat to slightly up.
– Operating expenses will increase 8-10% due to less vacation and $7M extra charges.
– Tax rate will be higher in 2009 since the R&D Tax Credit hasn’t been renewed.
CEO
[…]
“The CPU has become good enough for most users.”
[Enthusiasm about low-end CPU + high-end GPU configurations]
[…]
—
Q&A
—
Q: Marv, Q1 slightly stronger than seasonal – how do you perceive seasonal and that strength? Strength in desktop?
A: Seasonal is down 5% historically. PC in general is 5-10%. So I mean it’ll be down less than that.
Regarding desktop, performance GPUs are doing very well (8800GT).
Q: Notebook arena volatility? + Growth in the 20% range?
A: Notebook in Q4 was up 1%, it certainly didn’t decline. I would expect it to follow seasonality in Q1.
Regarding 2008, I don’t think I have any update compared to what I said earlier.
Focus on growth in desktop GPUs, growth in MCPs, growth in Workstation.
Q: April quarter, strength in the desktop GPU market. Do you see growth in the overall business?
A: It’s all over the segments, increasing adoption of the GPU. Bias towards slightly higher-end GPUs.
People understand that rebalancing the system to be more GPU-centric will result in muigher performance.
One PC OEM after another, they are increasing the budget allocating to the GPU.
Q: Competitive landscape in MCP? Notebook market? Dual-chip X2 from AMD?
A: We have the only Motherboard GeForce solution for both AMD and Intel.
Anybody who doesn’t want to sacrifice a rich graphic experience and not sacrifice compatibility,
we believe our GPUs on the motherboard are ideal. This is our first year for that on the Intel platform
and we’d expect that to do quite well. We’re enthusiastic about MCP.
[marketing about X2 vs 8800GTX] “We will shortly announced Tri-SLI”. [errr?]
Q: Cost issues regarding 8800 GT?
A: Yeah. Hmmm. 8800 GT was ramped probably faster than any other high-end GPU in our history.
In just 2 months of production, we shipped 2 millions of them. Yet the die size is larger than any other GPU.
We had some manufacturing challenges, but now yields should be much better going forward.
Marv: From my standpoint, it was about getting the product out. We focused on that even though cost was high.
Q: Ageia?
A: […] Our strategy is to port the physics engine on top of CUDA.
Our expectation is that this is going to encourage people to buy even better GPUs. […]
Q: Timeline for when we should start to see the impact in the actual product offering?
A: We’re working on porting the physics engine to CUDA right now.
Every CUDA-enabled GPU will be able to do it. […]
Q: Segment breakout? When could Ageia be accretive? 8800 GT costs? Need to port to 65nm?
A: […] Consumer was down 18% quarter-to-quarter. […]
“8800 GT costs is just about doing the process engineering […]”
Ageia doesn’t have high operating expenses […]
Q: CUDA? Requires a CPU business?
A: We believe in Heterogeneous Computing, the CPU is already there [from Intel/AMD], it’s fabulous […]
[GPU Computing marketing] [Physics marketing]
Q: DX10 Chipset. What are your expectations there?
A: In order to get Vista Certification by the second half of the year, you require DX10.
So I think the answer is we’ll get there as fast as possible.
Q: X2-type of products, will NVIDIA introduce products like that? Will that become the standard at the high-end?
A: We would do an X2-like product only if it delivered performance that’s possible only
But there’s no question a single GPU approach is better. But either way, it has to be the absolute highest performance.
If a X2 has the highest performance, it will be accepted. Otherwise, you’ll have big problems.
Q: In the near-term?
A: [huge laughter] We can’t talk about future products.
Q: Cash?
A: […] Intend to buy more stock back in Q1.
Q: Growth targets for the year still around 20%; did you discuss share gains etc.? AMD in the notebook area?
A: Maybe we’re just unsuccessful in communicating this, but the entire GPU market is booming.
We might be gaining share but it’s not significant. […] We’re just selling more GPUs and slightly higher-end.
Q: For all platforms? Desktop/Laptop/Workstation?
A: Absolutely.
Q: US vs International demand?
A: Not dramatically different demand in the different regions.
Our expectation is that the growth of GPUs will overcome the seasonalities.
Q: Pricing environment?
A: Pricing is good. More money spent on GPUs so that helps Average Selling Prices for the entire GPU business.
Q: ASPs?
A: Up nicely, since we shipped a lot of 8800 GTs.
Q: Operating expense growth in Q1; what about after Q1?
A: Working hard to keep it flat, but we’ll see how successful we are.
Q: Supply etc.?
A: We are the world’s fabless semiconductor company.
The products that we build are very complex and the die sizes of our largest GPUs are significantly bigger than CPUs.
So these processors consume a lot of wafers, it’s imporant we work very very closely with our partners.
TSMC has done a wonderful job for us, and my expectation is we’ll get the fabless model to new heights.
So we obviously take supply very seriously.
Q: Lead time?
A: It hasn’t really changed.
Q: Guidance for better than seasonal for Q1. Unique for NVIDIA?
A: I think the GPU market is just growing. It ought to help anybody who builds a GPU.
The way I see it is that visual computing is just becoming ever more important.
Q: Competitive landscape for the fiscal year. Unit share or revenue share perspective for main business lines?
A: Can’t break that down, sorry. [market is growing] [segmentation of the market and increase of ASPs]
Q: Gross margins. TSMC has talked about trying to renegociate pricing. Did this affect the margins?
A: Gross margin impact of 8800 GT was completely my fault. It has nothing to do with TSMC.
We’ll have to take all of that responsibility ourselves. But the good news is that since it’s entirely our fault,
we can fix it entirely ourselves. Can still expand margins.
Q: Competitive landscape in Notebooks. You vs AMD and IGPs in the next cycle?
A: In the notebook segment, AMD has wonderful offerings. Don’t forget they still have a terrific GPU design organization.
Between NVIDIA and ATI, or AMD now, it is the unambiguously the two best GPU design teams the world has ever seen.
I give them a lot of respect. And in the lower-end segment, we can’t differentiate against them. So we don’t expect
to win much of the business. In the upper-end, we can differentiate and we invest much more in R&D.
Q: Inventory increase?
A: New products in the pipeline.
Q: Overall PC environment opinion?
A: We’re fine. All we see is fine. We watch every single week around the world, and it looks good for us.
I don’t really know what else to say.
Q: OEM vs Whitebox difference?
A: Not really. I think it’s possible that the SKUs we are in are selling well and people are just prefering
platforms that we are designed into, but I don’t really know.
[visual computing & reallocation of resources within the PC]
I think it’s logical that should be a permanent thing.