01—Abstract
Summary
Summary of the 10-K filed March 13, 2009. Cited figures are marked; the original filing is the authoritative source.
NVIDIA Corporation's 2009 10-K filing reveals a challenging year marked by a significant revenue decline of 16% to $3.42 billiona, driven primarily by a 29% decrease in desktop GPU sales due to market shifts towards notebooks and the broader economic recession.
Despite this revenue drop, the company focused on strategic product development, introducing new GeForce and Quadro graphics cards, and expanding its high-performance computing offerings with Tesla products and CUDA technology. The acquisition of Ageia Technologies also bolstered its gaming physics capabilities. However, the company faced substantial headwinds, including a large $196 millionb warranty charge related to a product defect in older notebook GPUs and MCPs, increased research and development expenses, and ongoing litigation.
The company's financial performance was notably impacted by the economic downturn, leading to a net loss of $30 millionc for the fiscal year, a stark contrast to the profit in the previous year. NVIDIA's strategy centered on maintaining technology leadership, expanding into new markets like high-performance computing, and adapting to evolving consumer preferences, particularly the growing importance of mobile devices with its Tegra processors. Despite the financial pressures and product quality issues, NVIDIA continued to invest heavily in R&D, emphasizing its commitment to innovation in visual computing.
02—Key points
Key Highlights
- Revenue decreased by 16% to $3.42 billion in fiscal year 2009, largely due to a 29% decline in desktop GPU sales.
- The company incurred a significant $196 million warranty charge related to a product defect in certain previous-generation MCP and GPU products used in notebook systems.
- Despite revenue challenges, NVIDIA launched new products across its GeForce, Quadro, and Tesla lines, highlighting advancements in unified architecture, CUDA technology, and high-performance computing.
- Acquisition of Ageia Technologies strengthened NVIDIA's position in gaming physics with its PhysX software.
- Research and Development expenses increased by 24% to $855.9 million, reflecting continued investment in future technologies.
- The company experienced a net loss of $30 million in fiscal year 2009, compared to a net income of $797.6 million in the prior year, impacted by the revenue decline and the warranty charge.
- NVIDIA is strategically expanding into the high-performance computing market with its Tesla GPU computing products and CUDA parallel processing architecture.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2009, NVIDIA Corp lost $0.01.
- Revenue$3.42B100.0%
- Cost of revenue−$2.25B65.7%
- Gross profit$1.17B34.3%
- Operating costs−$1.24B36.4%
- Operating income−$70.7M2.1%
- Interest, other & tax$40.7M1.2%
- Net income−$30.0M0.9%
04—Financials
Financial Highlights
Figures from 10-KFY2009filed March 13, 2009Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $3.42B$4.10B | −16.4% |
| Cost of Revenue | $2.25B$2.23B | +1.0% |
| Gross Profit | $1.17B$1.87B | −37.2% |
| R&D Expenses | $855.88M$691.64M | +23.7% |
| SG&A Expenses | $362.22M$341.30M | +6.1% |
| Operating Expenses | $1.24B$1.03B | +20.5% |
| Operating Income | -$70.70M$836.35M | −108.5% |
| Interest Expense | $406K$54K | +651.9% |
| Net Income | -$30.04M$797.64M | −103.8% |
| EPS (Basic) | $-0.00$0.04 | −103.4% |
| EPS (Diluted) | $-0.00$0.03 | −103.8% |
| Shares Outstanding (Basic) | 21.93M22.00M | −0.4% |
| Shares Outstanding (Diluted) | 21.93M24.27M | −9.7% |
05—Questions
Frequently Asked Questions
What were the primary drivers of NVIDIA's revenue decline in fiscal year 2009?
The primary driver of NVIDIA's 16% revenue decline in fiscal year 2009 was a 29% decrease in desktop GPU sales. This was attributed to a market shift away from desktop PCs towards notebooks, increased competition, and the overall impact of the global economic recession.
What was the significance of the $196 million warranty charge?
The $196 million warranty charge was a significant event in fiscal year 2009, related to anticipated customer warranty, repair, return, and replacement costs arising from a weak die/packaging material set in certain previous-generation MCP and GPU products used in notebook systems. This charge materially impacted the company's cost of revenue and gross margin.
How is NVIDIA addressing the shift towards mobile computing?
NVIDIA is addressing the shift towards mobile computing through its Consumer Products Business (CPB), which includes its Tegra and GoForce mobile brands. The company launched the Tegra APX 2500 and Tegra APX 2600 computer-on-a-chip products, designed for mobile phones and handheld devices, and is collaborating with Google on the Android software stack for these processors.
What is NVIDIA's strategy in the high-performance computing (HPC) market?
NVIDIA is entering and expanding in the high-performance computing market with its Tesla family of GPU computing products and its CUDA parallel processing architecture. CUDA allows for general-purpose computing on GPUs, accelerating compute-intensive applications significantly compared to CPUs alone. The company is actively working with developers and universities to promote the adoption of CUDA.
06—Continue