Nvidia Posts Strong Earnings Thanks To Kepler and Tegra 3

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News Posted: Fri, Aug 10 2012 12:42 PM
Nvidia has released its Q2 earnings for FY2013, and it's good news all around for the graphics manufacturer. While a number of firms had trouble in Q2 thanks to weak European sales and sluggish US demand, Nvidia turned in a net income of $118M on total sales of just over a billion. Nvida's strong quarter comes partly courtesy of Kepler's popularity -- GPU sales were up 15.3% in Q2, at $668M. Revenue was at the top of the company's guidance.

The other major factor was the announcement of Google's Nexus 7. Nvidia's Tegra 3 is at the heart of that device, and it gave the company's tablet chipset a major boost. Unlike Tegra 2, which staked out a strong position in both tablets and phones, Tegra 3 hasn't been widely adopted outside of tablets, and the Android tablet market hasn't exactly dethroned the iPad. Google's Nexus 7 has reportedly been selling extremely well, boosting Nvidia's consumer product revenue by over fifty million dollars.

Nvidia's Professional Solutions Business (PSG), which includes Quadro and Tesla, was the one down side, revenue in this market fell slightly, to just under $200 million. Nvidia states that this was due to the combination of weak European sales and possibly the delay of Intel's Romley chipset. It expects sales to pick up again in Q3.

So How's Tesla Doing?

One point that Nvidia doesn't specifically address is how strong Tesla sales have been. The company has three business segments -- consumer GPUs, Professional Solutions (Quadro and Tesla), and Consumer Products Business (Tegra). Wall Street hasn't paid much attention to Tesla's performance over the past four years, but with Intel's Xeon Phi shipping this year, we suspect that's going to change. Nvidia has been fighting to create a GPGPU business around its own products -- is it working?

By all appearances, not very well. We base that impression on a consideration of the company's revenue, broken out by segment. Figures are given for the first half of the year going back through 2010. The roughly 7% decline in GPU revenue since 2010 has been more than offset by Tegra's strong growth; revenue from consumer products has increased four-fold in just two years. That's a significant achievement for Nvidia and it speaks well of the company's efforts in the mobile sphere.

Professional revenue, in contrast, has held steady for the past two years. That doesn't mean Nvidia hasn't sold any Tesla parts, but it suggests that Tesla's impact on revenue has been marginal at best. If the company is selling Tesla hardware, it may well be selling it to the same companies that would normally have bought Quadros. It's always been apparent that Tesla would be a long-term endeavor, there's no quick way to drive adoption of an emerging standard, particularly when it requires the adoption of new programming techniques.

The problem for Nvidia is that its honeymoon is just about over. The upcoming K20, due in October, is reportedly targeting between 1.5-1.8TFLOPS of double-precision performance, compared to Knights Corners' estimated 1TFLOPS. Even if K20 has a marked real-world advantage, however, Intel's software compilers, performance analysis tools, and code optimization capabilities are second to none. Xeon Phi's launch will focus a great many eyeballs on Tesla's performance and capabilities -- and NV has to be ready.
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Erakith replied on Fri, Aug 10 2012 7:33 PM

Good read!

I'd be interested to see how AMD's Q3 results compare. Do we have those available? I did a quick google but only found estimates.

Still, these results are pretty much "as espected" for me; at least as far as GeForce and Quadro/Tesla are concerned. The Tegra results are pleasantly surprising, and I'm glad to see nV doing well.

Marketplaces thrive on competition; I hope when I read AMD's results, they're equally positive for the most part. Something tells me they won't be, though. A marketplace with no competition is one that does not promote innovation, and that is bad for everybody.

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Joel H replied on Sat, Aug 11 2012 1:12 AM

Q2, not Q3. We do have AMD's data from the last period.


AMD faces some significant challenges. Their GPU business is a bit over a third the size of Nvidia's, and the the new FirePro cards need some significant driver oomph to challenge Quadro.

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3vi1 replied on Sat, Aug 11 2012 6:18 PM

>> AMD faces some significant challenges.

Yep. Even in the Linux world, where AMD has been a lot more open and forthcoming with specs, they still seem to lag behind. I'm hoping they come up with something revolutionary soon - before nVidia makes them irrelavent. The competition between those two companies has been one of the things really driving improvements in the video market (across the board, regardless of OS).

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?


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