Followers | 679 |
Posts | 141062 |
Boards Moderated | 36 |
Alias Born | 03/10/2004 |
Sunday, May 19, 2019 8:28:12 AM
By: Motley Fool | May 17, 2019
In February, NVIDIA (NASDAQ: NVDA) reported a terrible fourth quarter, with its results dragged down by excess gaming inventory, weak sales of its newest graphics cards, and a slowdown in the data center market. Revenue plummeted 24% year over year, and the company guided for an even steeper decline in the first quarter.
At the same time, NVIDIA predicted that its revenue for fiscal 2020 would be flat to slightly down, an outlook that would require some pretty incredible, and wholly unrealistic, second-half growth. That forecast would require a massive rebound in the gaming business, something that didn't make much sense based on the headwinds facing that segment and what management was saying about what normalized demand would look like. It didn't add up.
It didn't take long for reality to rear its ugly head. Despite the company's 31% revenue decline in the first quarter slightly beating analyst estimates, NVIDIA pulled its full-year guidance entirely. "The core dynamics of our business at every level is exactly what we expected," said CFO Colette Kress during the first-quarter earnings call. "Just that said though, we're going to return to just quarterly guidance at this time."
I'll translate: "Everything's going according to plan, but we're changing the plan, and we're not telling you what it is."
A gaming rebound, sort of
NVIDIA's gaming business did come back to life in the first quarter, at least relative to the fourth quarter of last year. Gaming revenue was $1.055 billion, up 11% from the prior quarter, but down 39% year over year. Kress said on the earnings call that the company expects gaming to reach its normalized level, previously pegged at roughly $1.4 billion, sometime between the second and third quarters.
Kress also said that much of the company's expected sequential growth in the second quarter would come from the gaming business. NVIDIA expects total Q2 revenue of $2.55 billion, up about $330 million from the first quarter. If all of that growth comes from gaming, gaming revenue will be just shy of the normalized level in the second quarter.
Assuming NVIDIA hits its Q2 guidance, total gaming revenue in the first half of the year will be around $2.45 billion. That's a bit more than $1 billion lower than gaming revenue in the first half of fiscal 2019. NVIDIA would need to average nearly $1.9 billion of gaming revenue in the final two quarters of the year for gaming revenue to be flat this year. That's way above the normalized level, and it would require NVIDIA to set quarterly revenue records for its gaming business.
That's the math that made NVIDIA's original full-year guidance seem completely unrealistic. I expected NVIDIA to cut its guidance, which it effectively did by pulling it altogether.
Low visibility
Beyond the gaming segment, the data center business continues to struggle. Revenue was down both sequentially and year over year in the first quarter, and the company expects that weakness to continue. "The data center spending pause around the world will likely persist in the second quarter and visibility remains low," Kress said during the earnings call. She later added, "Right now, visibility probably just remains the same about as where we were when we started three months ago."
The data center business may look better in the second half of the year, but there's no telling how much better. Some of NVIDIA's customers are working through excess inventory, and inventory corrections like that don't happen for no reason. The rapid-fire data center growth NVIDIA has enjoyed in the past few years is probably not coming back.
With NVIDIA abandoning its guidance, a revenue decline this year is now almost a guarantee. The only question is: How bad will it be?
Read Full Story »»»
• DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• DiscoverGold
Recent NVDA News
- NVIDIA Sets Conference Call for First-Quarter Financial Results • GlobeNewswire Inc. • 05/01/2024 09:00:00 PM
- Philips Stocks Soar 47% Following US Deal, Tesla Bolsters Presence in China, and More News • IH Market News • 04/29/2024 11:11:24 AM
- BHP Bids $38.8 Billion for Anglo American; Biden Unveils Historic Micron Technology Deal, and More News • IH Market News • 04/25/2024 11:48:40 AM
- Apple Loses Market Share in China, GM Surges in Pre-Market Following Upward Revisions for 2024 Projections, and More News • IH Market News • 04/23/2024 11:25:34 AM
- U.S. Index Futures Surge While Wall Street Eyes Rebound on Earnings Focus, Oil Prices Slip • IH Market News • 04/22/2024 12:09:47 PM
- Li Auto Stock Drops 7.3% Amid Tesla Price Cuts, Salesforce Retreats from Informatica Deal, and Other Market Updates • IH Market News • 04/22/2024 12:09:21 PM
- Nasdaq, S&P 500 Extend Losing Streaks On Tech Weakness But Dow Advances • IH Market News • 04/19/2024 08:32:14 PM
- Traders May Make Another Attempt At Bargain Hunting • IH Market News • 04/18/2024 01:14:37 PM
- Apple to Invest $250 Million in Singapore Expansion, Oracle Commits $8 Billion to Japan Infrastructure, and More News • IH Market News • 04/18/2024 11:11:52 AM
- United Shares Surge 5.3% in Q1 2024 Earnings Beat; Take-Two Cuts 5% of Workforce, and More News • IH Market News • 04/17/2024 10:57:39 AM
- Delta Generates US$37 Million Profit in Q1, Google and Intel Unveil Cutting-Edge AI Chips, and More News • IH Market News • 04/10/2024 11:13:48 AM
- U.S. Stocks May Move Back To The Upside In Early Trading • IH Market News • 04/05/2024 01:10:21 PM
- Apple Terminates 614 Employees, Disney Unveils June Crackdown on Password Sharing, and More Updates • IH Market News • 04/05/2024 11:38:57 AM
- U.S. Stocks Close Sharply Lower Following Late-Day Sell-Off • IH Market News • 04/04/2024 08:34:37 PM
- Cal-Maine Surges on Strong Quarterly Performance, Taiwan Earthquake Disrupts Tech Supply Chain, and More • IH Market News • 04/03/2024 11:12:20 AM
- GameStop Shares Tumble 20% in Pre-Market Trading Amid Revenue Decline, Direct Digital Plummets 42%, and More News • IH Market News • 03/27/2024 10:54:47 AM
- Tech Sector Weakness May Weigh On Wall Street • IH Market News • 03/25/2024 01:26:54 PM
- U.S. Stocks Close Mixed On The Day But Sharply Higher For The Week • IH Market News • 03/22/2024 08:40:00 PM
- Looming Fed Announcement May Lead To Choppy Trading On Wall Street • IH Market News • 03/20/2024 01:16:55 PM
- U.S. Index Futures Trade Sideways Amid Anticipation of Fed’s Policy Update; Oil Prices Dip • IH Market News • 03/20/2024 11:17:32 AM
- JPMorgan boosts dividends, Chipotle unveils 50:1 stock split, and Latest News • IH Market News • 03/20/2024 11:15:48 AM
- U.S. Stocks Show Notable Turnaround Amid Rebound By Nvidia • IH Market News • 03/19/2024 08:35:13 PM
- Futures Pointing To Initial Pullback On Wall Street • IH Market News • 03/19/2024 01:22:58 PM
- Unilever Initiates Ice Cream Division Spin-Off and Announces Job Cuts; Berkshire Ramps Up Share Buyback Efforts, and More • IH Market News • 03/19/2024 11:33:10 AM
- US Index Futures Decline Ahead of Federal Reserve Meeting, Oil Prices Retreat • IH Market News • 03/19/2024 11:27:29 AM
NanoViricides Reports that the Phase I NV-387 Clinical Trial is Completed Successfully and Data Lock is Expected Soon • NNVC • May 2, 2024 10:07 AM
ILUS Files Form 10-K and Provides Shareholder Update • ILUS • May 2, 2024 8:52 AM
Avant Technologies Names New CEO Following Acquisition of Healthcare Technology and Data Integration Firm • AVAI • May 2, 2024 8:00 AM
Bantec Engaged in a Letter of Intent to Acquire a Small New Jersey Based Manufacturing Company • BANT • May 1, 2024 10:00 AM
Cannabix Technologies to Deliver Breath Logix Alcohol Screening Device to Australia • BLO • Apr 30, 2024 8:53 AM
Hydromer, Inc. Reports Preliminary Unaudited Financial Results for First Quarter 2024 • HYDI • Apr 29, 2024 9:10 AM