Intel delays hit Nvidia revenues

UPDATE Nvidia's shares lost $4.63 after Wall St opened, and currently stand at $9.93.

DELAYS BY INTEL in shipping Grantsdale followed by a limited recall hit Nvidia's graphics processor leadership in its second quarter, the CEO said in an analyst conference call last night.

See Nvidia profits tank. In after hours trading, NVDA fell by over three dollars to stand at $11.33.

Jen Hsen Huang said that desktop GPU sales declined more than 17% of units compared to its Q1. That was caused by a variety of factors including sales of integrated graphics chips.

He said: "We'd expected to ship PCI Express in late May, but Intel's delay meant our plans stalled". Aggressive competitive pricing during the quarter the delayed ramp of PCI Express and competitive pricing meant an unexpected decline in both ASPs and shipments, he said.

Huang is betting the company on adoption of PCI Express from the high end, he said.

Other factors in the poor quarterly results were enumerated by Nvidia's chief accountant.

He said that the decline in entry level products was greater than expected. July usually shows significant recovery, he said, but the usual recovery in July did not happen until very late in the month, so revenues fell well short of expectations.

Mainstream GPU sales declined by over $100 million, while margins declined slightly to just over 30%.

He said that operating expenses grew as we added 114 people primarily in R&D and sales. A "reasonable number" were in areas like wireless. He said that because shipments were heavily weighted in July, there wasn't enough time to collect receivables in the quarter.

Nvidia is being conservative about the third quarter, it feels less confident about PC market conditions in Q3, but expects Xbox business to be "solid but flat" in the third quarter. µ