Nvidia hit by market slowdown

Firm posts 'disappointing' Q2 financials and profit nosedives as it is hit by charges following manufacturing problems in the quarter

Nvidia has seen its turnover dip five per cent for its second quarter as it admits to a ‘disappointing’ financial performance.

The graphics card vendor has been hit hard by the general slowdown in the PC market and also took a $196m charge to cover anticipated customer warranty and repair costs following manufacturing problems during the quarter.

Turnover for the quarter was $892.7m compared to $953.3m in the same quarter the previous year. However for the six months ended 27 July, turnover increased to $2.05bn compared to $1.78bn – an increase of 15 per cent.

Q2 saw the firm post a net loss of $120.9m, but for the overall six months, net profit was $55.9m, a significant drop on the net profit of $305m posted for the same period in 2007.

Jen-Hsun Huang, president and chief executive of nVidia, said: “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."

Huang said the firm is remaining cautious, but optimistic about future growth opportunities.

Nvidia is also ramping up its stock repurchase programme, allowing it to purchase up to $2.7bn of its common stock.