NVIDIA Reports Financial Results for Second Quarter Fiscal Year 2010

- Revenue up 17 percent quarter-on-quarter to $776.5 million - GAAP net loss of $105.3 million, or $0.19 cents per share - Non-GAAP net income of $37.7 million, or $0.07 cents per share - GAAP gross margin of 20.2 percent; non-GAAP gross margin of 36.3 percent

SANTA CLARA, Calif., Aug. 6 /PRNewswire-FirstCall/ -- NVIDIA Corporation today reported revenue of $776.5 million for the second quarter of fiscal 2010 ended July 26, 2009, down 13 percent from $892.7 million a year earlier, and up 17 percent from the previous quarter.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020613/NVDALOGO)

On a GAAP basis, the company recorded a net loss of $105.3 million, or $0.19 per share, compared with a net loss of $120.9 million, or $0.22 per share a year ago. Reflected in these results is a net charge of $119.1 million related to the weak die/packaging set used in certain previous-generation chips that the company had initially identified and provided for in its prior fiscal year. On a non-GAAP basis excluding this item, and stock-based compensation as well as their associated tax impact net income was $37.7 million, or $0.07 per diluted share, compared with $74.5 million, or $0.13 per diluted share, a year earlier.

                         Quarterly Results Highlights
    ($in millions except             Q2 2010        Q1 2010        Q2 2009
     per share data)

    Revenue                          $776.5          $664.2         $892.7
    GAAP:
      Gross margin                     20.2%           28.6%          16.8%
      Net income (loss)             ($105.3)        ($201.3)       ($120.9)
      Income (loss) per
       share                         ($0.19)         ($0.37)        ($0.22)
    Non-GAAP: (1)
      Gross margin                     36.3%           30.6%          39.1%
      Net income (loss)               $37.7          ($46.7)         $74.5
      Income (loss) per
       share                          $0.07          ($0.09)         $0.13
      -----------------               -----          ------          -----
    (1) See Non-GAAP Measures for an explanation of these figures.

"NVIDIA's business is recovering. Product demand is improving, and our strategic investments are leading to new growth," said Jen-Hsun Huang, president and chief executive officer, NVIDIA. "Our two newest businesses began to ship meaningful amounts of product this past quarter and show significant promise. Tesla, the industry's first GPU for general-purpose high performance computing, achieved its highest-ever quarterly revenue. And Tegra, our ultra low-power computer-on-a-chip, is making exciting progress in the market for mobile and embedded devices. Our new businesses are positioned to benefit from the rise of mobile and cloud computing."

NVIDIA's second quarter results were impacted by an additional net charge of approximately $119.1 million to cover costs related to a weak die/packaging material set that was used in certain versions of its previous-generation chips. Although the number of units impacted by this issue remains consistent with the company's initial estimates a year ago, the cost of remediation and repair of impacted systems has been higher than originally anticipated. In July 2008, a $196.0 million reserve was accrued for the purpose of supporting our affected customers around the world. The weak die/package material combination is not used in any products currently in production.

GAAP net loss for the six months ended July 26, 2009 was $306.6 million, or $0.56 per share, compared to a net income of $55.9 million, or $0.09 per diluted share for the six months ended July 27, 2008. Non-GAAP net loss for the six months ended July 26, 2009, which excludes the net charge related to the weak die/packaging material set that was used in certain versions of our previous generation chips, a non-recurring charge of $140.2 million in connection with a previously announced cash tender offer to purchase employee stock options, stock-based compensation charges, and their associated tax impact, was $8.9 million, or $0.02 per share, compared to a net income of $286.2 million, or $0.49 per diluted share for the six months ended July 27, 2008.

Outlook

NVIDIA expects revenue in the third quarter ending October 25, 2009, to be up 5 to 7 percent over the second quarter.

Second Quarter Fiscal 2010 and Recent Highlights:

    --  Free cash flow was a positive $117.5 million during the quarter, with
        cash, cash equivalents and marketable securities ending at $1.47
        billion.
    --  NVIDIA delivered its first 40nm GPUs to customers in the second quarter.
    --  The NVIDIA((R)) ION((TM)) platform was awarded "Best Choice" -
        and 21 design wins disclosed - at Computex 2009.   Nine are already
        shipping, with a further 12 to ship in the third quarter.  Five more
        wins have been disclosed since Computex.
    --  NVIDIA started ramping up volume shipments of the Tegra((TM))
        computer-on-a-chip.  Microsoft's Zune HD was revealed to be based on
        Tegra.
    --  Quadro((R)) Plex SVS was launched.  SVS is a scalable visual computing
        platform for professionals who interact with 3D models and analyze large
        volumes of data.
    --  For Quadro, NVIDIA launched the NVIDIA(R) Optix(TM) ray tracing engine,
        part of a suite of application acceleration engines for software
        developers.  The suite also includes engines for managing 3D data and
        scenes, scaling performance across multiple GPUs and real-time modeling
        of hyper-realistic physical and environmental affects.
    --  Tesla((TM)) computing solution products are now carried by HP and
        Supermicro, joining a global list of OEMs including Cray, Dell, HP
        Lenovo, SGI and Sun.
    --  NVIDIA CUDA((TM)) architecture now accelerates AMBER, one of the most
        popular molecular dynamics codes, with  more  than  60,000  users  worldwide.
                AMBER  is  up  to  50  times  faster  when  run  on  a  GPU  than  a  CPU.
        --    In  the  financial  industry,  Numerix  and  CompatibL  announced  CUDA  support
                for  new  counterparty  risk  application,  and  achieved  an  18X  speedup.
        --    NVIDIA  and  Adobe  announced  GPU  acceleration  for  the  Flash  player,
                bringing  Internet  video  to  a  new  class  of  low-power  PCs  and  Internet
                devices.
 

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