Nvidia misses Revenue estimate - Huang says AMD to blame

[Speakerator]

Hi folks,

 

Source is from marketrealist.com, interview can be found at venturebeat.com

There's also quite a fun Reddit post about it 

 

Basically, investors weren't happy that NVidia missed analysts revenue estimates due to a drop in GPU sales with the mining craze gone and overstocks building:

Quote

NVIDIA’s (NVDA) fiscal 2018 fourth-quarter revenue guidance missed analysts’ estimates by $700 million. This revenue miss was purely from the gaming segment, as an unexpected increase in its midrange GPU (graphics processing unit) inventory forced the company to halt its midrange shipments.(marketrealist)

This is old news. Interesting, however, is how Huang justifies the overstock in the pipeline in an interview with GamesBeat / Venturebeat:

Quote

In the GamesBeat interview, Huang was asked how cryptocurrency, which accounted for only 10% of its quarterly revenue, expanded to one entire quarter’s worth of inventory. He stated this was because the channel also included AMD’s inventory. (marketrealist)

 

Quote

GamesBeat: How do we get to larger numbers that actually affect the quarterly results, though? Again, it seemed, in the past, that it (A/N: Crypto Mining Sales) was described as a small part of revenue, and now it’s something that can affect one or two quarters worth of inventory. It’s hard for me to understand why it makes a big difference.

 

Huang: Take a moment — let me just — the 1060 is the number one selling GPU in the world, and the 580 is the number 24. The gaming demand is such that the 580 demand is relatively small. If they decide to build a whole bunch of GPUs, 580s, for crypto, and then they shove that into the channel, then the market would be disproportionate, to us. Usually we would see — call it 90 percent us and 10 percent them. Now all of sudden the inventory in the channel could be very different. It could be 50 percent them and 50 percent us. Do you see what I’m saying? But there are so many people writing about inventories, Dean. Why waste your life on it?

Opinion: What kind of reasoning is this? "Our earnings would be so much better if it weren't for that other company not respecting our market share and selling a competing product with aggressive pricing to our consumers!" How dare they! *Grabs pitchfork*

 

IMO, NVidia deserves the hit in revenue, and with the ongoing mess that is the Pascal-Fadeout and Turing Pricing, I surely hope AMD continues to grow in the mid-range. I used to really like NVidia, and their products are still top-of-the line - but with business behavior like this, they surely hurt their image with the interested parties...

 

[Ashley MLP Fangirl]

tbh i've stopped caring about business practices. i'll use the product that is best for my usecase. 

[leadeater]

What, that makes no sense?

[Jurrunio]

Well, RX 580s mine Ether faster than GTX 1060 6GB, that's why more people buy RX cards and AMD can afford to make more of them. Ya 'choice by gamers' thingy ain't got ground here.

 

and also, Polaris cards still undercut Pascal 1060 prices today...

[LukaH]

lol wut?

[CTR640]

TBH, I doubt GPU's will be cheaper or more affordable. They relied way too much on the mining and now the pricing has been really out of balance. Who knows GTX2060 will be $499? And nVidia is too big to take a hit.

[samcool55]

I'm confused, the article says 1080 vs 580, the quote here says 1060 vs 580.

Now, what did he say?! 1060 or 1080?! They are quite different, you can't just swap them around.

 

1060 would make more sense but still, also with the recent price difference between 580 and 1060 no wonder people are getting AMD.

 

RTX is just too expensive and there is atm only 1 RTX game available and you need the 2080ti to actually use the ray-tracing stuff while keeping a somewhat decent framerate... It's cool tech, but not anywhere near ready for games.

 

Also, quite funny to blame your rival for your bad sales, if anything this should help AMD becuase Nvidia is a LOT bigger than AMD and nvidia is complaning that their clearly smaller rival is hurting them.

[DVA]

All I'm saying, is if they dump 1060 prices just to try to break even, I'm in. Budget builds for days. 

[Trixanity]

Our cards are so much better than AMD's and consumers only want our product but because they're producing more cards for crypto we're selling less gaming cards because we sell the majority of the cards on the market and gamers want our cards. WHAT!?

[Speakerator]

6 minutes ago, samcool55 said:

I'm confused, the article says 1080 vs 580, the quote here says 1060 vs 580.

Now, what did he say?! 1060 or 1080?! They are quite different, you can't just swap them around.

 

1060 would make more sense but still, also with the recent price difference between 580 and 1060 no wonder people are getting AMD.

The article has a wrong citation, which is why I linked the original interview. Huang talked about 1060's, not 1080. That would be interesting news, 1080 being top-selling cards while being pretty much discontinued everywhere...

[straight_stewie]

35 minutes ago, Speakerator said:

Opinion: What kind of reasoning is this? "Our earnings would be so much better if it weren't for that other company not respecting our market share and selling a competing product with aggressive pricing to our consumers!" How dare they! *Grabs pitchfork*

That's not what he's saying. What he's saying is that the value miss was because the futures analysts didn't take into account what the market as a whole would do, or in other words, that AMD would push really hard into the crypto market and disrupt the status quo. And that is what happened, and I saw no indication that Huang said that was good or bad, just that that's what happened.

[porina]

35 minutes ago, Speakerator said:

Basically, investors weren't happy that NVidia missed analysts revenue estimates due to a drop in GPU sales with the mining craze gone and overstocks building:

Analysts make a best guess what's going to happen in 3 months+, but in reality they don't know. Nor do nvidia or anyone else. Mismatches in expectations happens all the time, share price will take a temporary knock but things keep going on.

[Jurrunio]

11 minutes ago, straight_stewie said:

I saw no indication that Huang said that was good or bad,

this statement definitely feels negative.

53 minutes ago, Speakerator said:

The gaming demand is such that the 580 demand is relatively small. If they decide to build a whole bunch of GPUs, 580s, for crypto, and then they shove that into the channel, then the market would be disproportionate, to us. Usually we would see — call it 90 percent us and 10 percent them. Now all of sudden the inventory in the channel could be very different. It could be 50 percent them and 50 percent us.

tl;dr 1060 demand drops below expectation because RX 580 supply is higher than expected. Not blame-the-competitor? I don't think so.

 

@porina AMD not leaking any info on Navi GPUs also help :P, they've got time to wait for inventories to clear

[asus killer]

the quoted article is full of mistakes

 

"During NVIDIA’s fiscal 2019 third-quarter earnings call" 

travelling into the future i see 

 

"He explained that since NVIDIA’s GTX 1080 is the top-selling GPU and AMD’s RX 580 is number 24"

there is no way 1080 is the top selling GPU, no way. 

[porina]

3 minutes ago, asus killer said:

"During NVIDIA’s fiscal 2019 third-quarter earnings call" 

travelling into the future i see 

It's normal for companies to use financial years that are not aligned with calendar years. Where I work, we're in FY19Q3. FY19 starts April 2018. I don't know what nvidia uses, but they could be doing similar.

[Jurrunio]

1 minute ago, porina said:

It's normal for companies to use fiscal years that are not aligned with calendar years. Where I work, we're in FY19Q3. FY19 starts April 2018. I don't know what nvidia uses, but they could be doing similar.

especially since the source is no tech site, but a financing one

[straight_stewie]

Just now, Jurrunio said:

tl;dr 1060 demand drops below expectation because RX 580 supply is higher than expected. Not blame-the-competitor?

Nvidia did produce lower than their own forecasts (but their own forecasts were significantly lower than the forecasts being quoted), because they couldn't move as much product as they thought they could, because their competitors market share grew and the market shrunk as a whole. Saying that that's what happened when that is what happened is not an indication of blaming the competitor.

This is one of the biggest things I hate about modern societies. Everyone has to be mad at someone for everything. Nobody seems to understand that things just happen. Not very many things are actually under control and humans are notoriously terrible at predicting the future. Sometimes things just happen, and when someone tries to predict the future it's just silly to be mad when that prediction doesn't come true. Talking about what happened that caused the problem is not shirking it off or finding a scapegoat.

[asus killer]

2 minutes ago, porina said:

It's normal for companies to use financial years that are not aligned with calendar years. Where I work, we're in FY19Q3. FY19 starts April 2018. I don't know what nvidia uses, but they could be doing similar.

hey if that's the case then i don't know what to say. makes no sense to me but hey what do i know

[porina]

Just now, asus killer said:

hey if that's the case then i don't know what to say. makes no sense to me but hey what do i know

In the UK it kinda makes some sense as it aligns with the tax year here. However in a quick search it doesn't look like that is the case in the US, so I dunno either...

[done12many2]

6 minutes ago, straight_stewie said:

This is one of the biggest things I hate about modern societies. Everyone has to be mad at someone for everything. Nobody seems to understand that things just happen. Not very many things are actually under control and humans are notoriously terrible at predicting the future. Sometimes things just happen, and when someone tries to predict the future it's just silly to be mad when that prediction doesn't come true. Talking about what happened that caused the problem is not shirking it off or finding a scapegoat.

 

Well said.

[leadeater]

9 minutes ago, asus killer said:

hey if that's the case then i don't know what to say. makes no sense to me but hey what do i know

A lot of companies do it that way, they use financial year end as the dates for them. So if the financial year in question ends in 2019 then it's a 2019 financial year or quarter even if it started in 2018.

 

Edit:

Nice graph here showing each country

https://en.wikipedia.org/wiki/Fiscal_year

 

Quote

The fiscal year is usually denoted by the year in which it ends, so United States federal government spending incurred on 14 November 2018 would belong to fiscal year 2019, operating on a fiscal calendar of October–September

 

Edited November 29, 2018 by leadeater

[Syntaxvgm]

You mean the hardly competing in the GPU market right now AMD? Same AMD right?

 

[Taf the Ghost]

Hrmm... I question Jensen's analytics. The 1060 is the number one gaming GPU, sure, but the RX 580 at 24? The Steam Survey doesn't even support that view. What models are between the 1060 and 580? Now, if this was H1 2018 numbers? Sure! Because AMD sold probably half their stock to miners without ever hitting the consumer market. (Smart move when they didn't increase production much.)

 

Jensen seems pissed that Nvidia made the same mistake AMD made during the BitCoin craze. Lisa laughs in Zen.

[D13H4RD]

I don't know.

 

Sure, AMD made a good push during the crypto fad, but as a whole, AMD still has a tiny sliver of the GPU market.

 

They could be a factor in this, but I don't think it's everything

[BuckGup]

Hahaha Nvidia is acting like Intel