Low Q2 Results for NVIDIA

There is not one thing that can point to a bright future lying ahead for the Santa Clara-based graphics manufacturer, NVIDIA. After AMD finally unveiled its dual-GPU GeForce "destroyer," the Radeon HD 4870 X2, the green company announced that its business had not been doing all that well - and it all shows in the Q2 figures.

It looks like the replacement of faulty chips has taken a bigger toll on NVIDIA's budget than what initial estimations indicated. On top of that, AMD's recently released Radeon graphics cards have also brought their contribution to NVIDIA's hefty loss of a reported $120.9 million. The company posted sales of $893 million, down 23% from the $1.15 billion the first quarter, and down 5% from the $936 million year over year. According to the company, the GPU replacement program came at the whopping price of $196 million, being one of the main reasons for the low Q2 figures.

"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," said Jen-Hsun Huang, president and CEO of NVIDIA. "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." he added.

The CEO also added that NVIDIA remained optimistic about its graphics business and growth opportunities made possible by CUDA, the company's general purpose parallel computing architecture. Moreover, the announcement also included a mention of a clear intent of starting to target the entry-level desktop segment with the release of low-cost GPUs this quarter.