Nvidia (NVDA) CEO Jen-Hsun Huang was kind enough to speak with me this evening following the company’s conference call with analysts to discuss fiscal Q4 results that featured better-than-expected earnings per share, though the revenue view for this current quarter was a bit lighter than the Street had been modeling.
The company this quarter started a new reporting format, separating into two segments what it views as its principal product lines: graphics processing units (GPU) such as its “Tesla” line, and its “Tegra” application processor for smartphones and tablets. The details of the new reporting structure can be seen in Q4′s commentary by interim CFO Karen Burns.
GPU revenue of $832.5 million in Q4 was up 7%, year over year, while Tegra revenue of $208 million was up 90%, year over year.
On the call, Huang told analysts the company was holding off on giving any forecast for the year for Tegra revenue, something analysts who listened expressed an interest in. Huang said the company was reviewing various factors for the year, and anyway he wasn’t sure if it was worth forecasting Tegra:
I think we haven’t decided yet whether to guide the full year or not. At the moment we decided to guide a quarter out and to tell you the truth I am not sure how helpful it was to all of you that we guided the whole year, and so I think that at the moment we are still thinking through it but some of the comments that you heard related in Rob’s comments were that specific to Tegra, at this point we have more design wins than we had at this point with Tegra 3.
I asked Huang during our conversation whether he thinks the company’s forthcoming “Icera” baseband chip, which handles the wireless functions of a phone, will help sell more Tegra units.
I pointed out that for the most expensive smartphones, phone makers have tended to want to choose and purchase the baseband chip separately from the application processor.
“Absolutely,” said Huang, regarding whether Icera will help sell units of Tegra. “I think the market is already in the process of changing”:
There’s a segment of the marketplace where connectivity is not needed. But going forward, the largest TAM [total addressable market] is going to be in the LTE-connected device market. The baseband has changed from being a separate part. Nearly all our opportunities have been where LTE not required. When we are in situations where LTE is required, it’s harder for us to compete for that business because competition has had the edge in that.”
He was referring, of course, to the dominant position in baseband sales of Qualcomm (QCOM).
Huang had said on the call that in large part, the outlook for this quarter’s revenue reflected the ongoing weakness in the PC business:
Our GPU business will be down very much in line with the PC industry and as you know, Intel (INTC), AMD (AMD), and other companies have already disclosed.
During our conversation, then, I asked Huang why he sees his GPU sales being affected by the PC market’s broader weakness, given that his sales tend to come from the higher end of the PC market, where gamers sustain demand for performance products of the kind Nvidia provides.
“Well,” said Huang, “there’s guidance, which is one thing, and then there’s what one delivers, and as you know, they’re not exactly the same thing.”
“We should guide to a number that we have a fairly high certainty of reaching.”
Then he added, “But the dynamics are right for us, the rise of massively multiplayer, and free to play are growing, and we have these new growth opportunities” such as the Icera baseband business.
“Whatever happy results end up coming our way, we’ll be happy to have them.”
Nvidia shares are down 17 cents, or 1.4%, at $12.20.
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