NVIDIA posts $120M loss for Q2

NVIDIA reported their Q2 results after the close of the market yesterday, and the numbers aren't pretty. After coming off a record Q1 revenue, NVIDIA earned $892.7 million last quarter, a decrease of 5% from last year's Q2. Overall NVIDIA went into the red last quarter, losing $120.9 million. The largest cause for the loss was the $196 million charge NVIDIA took to repair and replace laptops with GPUs containing weak die/packaging material. 

According to NVIDIA CEO Jen-Hsun Huang, NVIDIA also came under pressure due to weakening demand in the desktop PC market, and of course, pricing pressure as the result of new ATI products:

"Our Q2 financial performance was disappointing. The desktop PC market around the world weakened during the quarter. And our miscalculation of competitive price position further pressured our desktop GPU business. We have a great product line-up and, having taken the necessary pricing actions, we are strongly positioned again. Our focus now is to drive cost improvements and to further enhance our competitiveness through the many exciting initiatives we have planned for the rest of the year. In contrast, the rest of our businesses did not exhibit the same dynamics as our desktop business. The notebook GPU, MCP, and Professional Solutions groups grew a combined 27 percent year-over year."

Mr Huang is of course referring to NVIDIA's string of price cuts for the GeForce GTX 200 and GeForce 8/9 series of GPUs. "Cost improvements" refers to the impending arrival of 55-nm G92b, G94b, and GTX 200 GPUs. Based on what we've heard, the first 55-nm GeForce 9800 GT and 9600 GT cards should hit retail in September (NVIDIA had hoped to have boards available in August). NVIDIA blames the 55-nm delay on weak sales of existing 65-nm products, which are still stuffing the channel. NVIDIA will roll out 55-nm GPUs once inventory levels of 65-nm parts draw down.

NVIDIA also announced an increase of $1 billion in their stock repurchase program. With shares trading near 52-week lows, executives at the company obviously feel their stock is a bargain right now.