nVidia to bury another compeditor?

[Auric]

3dfx was a flash-in-the-pan turd (mmm, turd flambe) not even comparable to established graphics companies. They had a single profitable quarter which only covered previous losses. Even that was luck due to fluctuations in the DRAM market at the time. Thereafter they continued to lose money and quickly went belly up, with Nvidia aquiring the scraps. It is foolhardy to remember 3dfx as more than it was simply because their bidness model called for more advertising (i.e. glossy magazine ads) and payments to game developers. Meanwhile, the real players carried on engineering saleable products and making money.

 

[taltamir]

That 200 million profits were actually profits PASSED TO SHAREHOLDERS. Not total profits... most of the money went back into to research and development.

According to these numbers:
http://finance.yahoo.com/q/is?s=NVDA&annual
http://finance.yahoo.com/q/is?s=ATI&annual

In 06 nvidia had 2,375,687k in revenue, 1,465,654k as cost of revenue (expenses), 910,033k in gross PROFIT, 357,123k invested into RnD, 202,088k in general and administrative costs, and a weird 14,158k "non reoccuring" charge that they didn't have in any other year.
While ATI had 3,539,900k in revenue, but 2,889,700k in cost of revenue (they sold more but had less profit per sale), 650,200k in gross profit, 275,800k in general and administrative costs, and they do NOT list ANY money going into RnD...

While in 07 nvidia has thus far sold 3,068,771k (thats 3 billion dollars folks) in revenue, 1,768,322k (1.7 billion dollars) cost of revenue with 1,300,449k gross profit (thats gross profit of 1.3 billion dollars). After which 553,467k into development and 293,530k into general and administrative costs.
Compared to 07 ATI who thus far sold for 4,936,600k (4.9 billion dollars) in revenue but with 3,743,800k (3.7 billion) cost of revenue for a total of 1,192,800k (1.2 billion) gross profit. after which 295,300k on general and administrative costs but list no money going into rnd... listing all the rest as pure profit going to share holders...

Something is definitely WRONG with the ATI books there... How can they be spending no money on RnD yet still manage to get new products?
And notice that they actually sold for a total revenue of 50% more then nvidia... but they still made less money after the sales because the cost of renue was much MUCH higher. Giving them only small margins per item sold.

http://finance.yahoo.com/q/is?s=AMD&annual
AMD's books don't look too hot either... in 06 they manage to sell for a total of 5 billion revenue at about 100% profit (ie, their cost is half the price they are selling for) so they got a total of 2.5 billion... but half of it went to rnd, half went to operational costs and they were left with a loss of 47 million dollars.

http://finance.yahoo.com/q/is?s=INTC&annual
intel is an interesting beast... it is listed as 27 different companies... but by narrowing it down to the US and Canada branch I found out the above link...
The intel us raked in 35 billion in 06 with a cost of revenue at 17 billions... leaving them with 18.2 billion. Of which 5.8 billion went into RnD (compared to AMDs 1.2) 6 billion went to administrative and general operational costs... With 5 billion passed on as profit to shareholders!

 

[BladeVenom]

Something I almost never see mentioned when talking about ATI and Nvidia is consoles. The Wii is the best selling console and it uses an ATI GPU, the 360 is the second best selling console and it uses an ATI GPU, and lastly at last is the PS3 which uses a Nvidia GPU.

When it comes to consoles ATI is totally dominating. That has to be worth something doesn't it?

 

[taltamir]

actually i wanna hear more about this.. someone said in the forums that ATI console department is loosing money and I was wondering how that could be (or if he is wrong)...

And yea ATI scored a good deal by getting those two consoles. I mean, the desireability and quality of those products is clear, with wii > xbox > ps3. And all the factors that go into that ranking have absolutely nothing to do with graphics quality.

The xbox and ps3 are mostly on an even playing field, with the xbox winning on cost due to the PS3 pushing blu-ray. And the wii is the cheapest of them all, and wins big time on the "fun" department.

This btw is an example where a company would be willing to sell at a loss... Sony could sell PS3 at a loss if it mean blu ray dominates the market, and then charging licensing for blu ray would more then make up for those lossess..

 

[Auric]

Originally posted by: taltamir
If they buy the company whole then there is no need to transfer it... it would just be released by VIA as a wholly owned subsidiary of nvidia.

Rather like when VIA aquired S3 which in turn had aquired Exponential (outbidding Intel)and, if I recall, led to cross-licensing agreements which essentially saved the former's x86 bidness for the forseeable future and of course struggling S3 itself. Cunning. Of course, relying upon another's platform is fraught with hazards, as AMD learned. What will Nvidia do? Content itself with scraps a la VIA and SiS or... ?

 

[taltamir]

no, buy via, then license their platform to via, and have via sell the platform nvidia (who now owns them) licensed to them...

 

[blehman84]

There's a bit wrong with your analysis of the financials Taltamir:

Originally posted by: taltamir

According to these numbers:
http://finance.yahoo.com/q/is?s=NVDA&annual
http://finance.yahoo.com/q/is?s=ATI&annual

The ATI statements you are linking to belong to Allegheny Technologies Inc. http://www.alleghenytechnologies.com/, which is a producer of specialized steels. It is not the semiconductor manufacturer; their 2005 financial statements can be found in their 2005 annual report http://ir.ati.com/phoenix.zhtm...&p=irol-reportsannual.

Originally posted by: taltamir
In 06 nvidia had 2,375,687k in revenue, 1,465,654k as cost of revenue (expenses), 910,033k in gross PROFIT, 357,123k invested into RnD, 202,088k in general and administrative costs, and a weird 14,158k "non reoccuring" charge that they didn't have in any other year.

Actually those numbers you are using there are technically from 2005 as the period was pretty much from the end of January 2005 to the end of January 2006.

Gross profit isn't what the average person is referring to when they talk about profit; they are actually talking about net income (or net profit). Gross profit only has the direct costs deducted from revenue (costs of sales/cost of goods sold). It doesn't included overhead, marketing and other sales expenses, income taxes and interest payments, salaries of people of other employees in areas likes sales and executive positions, among many other expenses including R&D.

You can't consider the 910 million to be total profit in the year ended Jan 29, 06, because that wouldn't have even included paying their property leases, utility expenses, salaries for a lot of their workers, income taxes, among other things. Even R&D is somewhat fixed (especially for tech companies) as companies generally aim at keeping it at a certain % of revenue for a minimum. After paying everything they needed to pay in that period you are referring to, they really had 301 million in profits and not 910 million.

Originally posted by: taltamirThat 200 million profits were actually profits PASSED TO SHAREHOLDERS. Not total profits... most of the money went back into to research and development.

Actually they didn't pass anything to shareholders. Look at the cash flows, and you'll see they haven't paid any dividends in at least the past three years. The net income for the period is actually added into prior retained earnings and dividends are deducted to come up with the retained earnings for the end of the period, or in other words, net income is kept with the company unless it is paid in dividends.

 

[taltamir]

Actually it is important NOT to include the RnD and management costs into profit calcualtions because those are not indicative of the condition of the company... if the company makes less gross profit and has to downsize its marketing, RnD, and mangement, then it is not gonna make as much money in future years... while if a company is making more gross profit so that it increases its RnD cost from 357 milion to 553 milion it is doing terrifyingly well!
Thats my whole point. It is important to look at the gross profit, not at the net profit passed on to stock holders...

And yea that ATI being the wrong company explains some discrepencies... thanks for pointing it out. I got the two links from someone else's post and I didn't notice that the ATI is the wrong ATI when I was going through the numbers.

 

[mruffin75]

Originally posted by: taltamir
Yea times ARE changing.. for example nvidia just managed to break 1 billion dollars profit...
A company is about making money, and nvidia makes lots and lots of money... more money = ability to buy companies (like say, buying via for a x86 license), equipment (build another fab?), and hire researchers (lets develop an even BETTER product)...

I don't think Nvidia will ever try and produce their own CPU.. VIA is only into low power/low performance CPU's that are used in small cases... they're nowhere *near* AMD/Intel..at all!

To get them up to AMD/Intel performance levels they'd have to invest a *lot* of money... (read billions)..

And build *another* fab? AFAIK Nvidia don't own *any* fabs?? Don't they get all their GPU's from TSMC?? Just like ATI?

And just to correct you, it wasn't a billion dollars *profit*...it was a billion dollars in revenue.. their actual profit was 235 million.

 

[blehman84]

Originally posted by: taltamir
Actually it is important NOT to include the RnD and management costs into profit calcualtions because those are not indicative of the condition of the company... if the company makes less gross profit and has to downsize its marketing, RnD, and mangement, then it is not gonna make as much money in future years... while if a company is making more gross profit so that it increases its RnD cost from 357 milion to 553 milion it is doing terrifyingly well!
Thats my whole point. It is important to look at the gross profit, not at the net profit passed on to stock holders...

And yea that ATI being the wrong company explains some discrepencies... thanks for pointing it out. I got the two links from someone else's post and I didn't notice that the ATI is the wrong ATI when I was going through the numbers.

Hold up one second here, I agree that gross profit is an important figure, but I'm a little confused about what you're saying here. You just said it's important not to look at other operating costs like RnD and management costs because those are not indicative of the condition of the company? But didn't you just post this:

Originally posted by: taltamir

http://finance.yahoo.com/q/is?s=AMD&annual
AMD's books don't look too hot either... in 06 they manage to sell for a total of 5 billion revenue at about 100% profit (ie, their cost is half the price they are selling for) so they got a total of 2.5 billion... but half of it went to rnd, half went to operational costs and they were left with a loss of 47 million dollars.

If you're saying that R&D and other costs after gross profit are not indicative of the condition of the company, how come you are saying AMD isn't looking too hot, when their gross margin in the last annual period is better than Nvidias (AMD gross profit is 49.4% of revenue, while Nvidia's gross profit is only 42.4%)?

If gross profit is the best indicator of the condition of a company, as you seem to be saying, AMD is actually in great condition considering that they have a better gross margin than Nvidia.

 

[DAPUNISHER]

The one constant is change, so what a few years from now will bring is hard to say. The OEM market is where the real sales are, and IF AMD is first to produce a good GPU/CPU based platform *Fusion*, that cuts costs for the OEMs, it'll be huge winner for them IMO, and man do they need one!

 

[Golgatha]

Originally posted by: BladeVenom
Something I almost never see mentioned when talking about ATI and Nvidia is consoles. The Wii is the best selling console and it uses an ATI GPU, the 360 is the second best selling console and it uses an ATI GPU, and lastly at last is the PS3 which uses a Nvidia GPU.

When it comes to consoles ATI is totally dominating. That has to be worth something doesn't it?

Both Nintendo and Microsoft commissioned those chips from ATI from what I understand. Each respective company paid once and owns the resulting IP. This is only good for Microsoft and Nintendo, although ATI could indirectly benefit due to optimizations for their architecture due to the vast number of console ports we see floating around nowadays, which logically could help sales of their hardware on the PC side.

 

[apoppin]

Originally posted by: Golgatha

Originally posted by: BladeVenom
Something I almost never see mentioned when talking about ATI and Nvidia is consoles. The Wii is the best selling console and it uses an ATI GPU, the 360 is the second best selling console and it uses an ATI GPU, and lastly at last is the PS3 which uses a Nvidia GPU.

When it comes to consoles ATI is totally dominating. That has to be worth something doesn't it?

Both Nintendo and Microsoft commissioned those chips from ATI from what I understand. Each respective company paid once and owns the resulting IP. This is only good for Microsoft and Nintendo, although ATI could indirectly benefit due to optimizations for their architecture due to the vast number of console ports we see floating around nowadays, which logically could help sales of their hardware on the PC side.

what do you mean "paid once"?


MS has to pay AMD for each GPU - or does MS make them themselves?
. . . and it appeared MS paid over $100 at launch with the price coming down to around $30 now

http://www.next-gen.biz/index....=view&id=1497&Itemid=2


http://www.isuppli.com/news/xbox/

AMD is back from the dead and i think it is nvidia's turn to worry

 

[superbooga]

You guys don't realize that NVIDIA can very, very easily buy AMD if it chooses to, eliminating it as a competitor.

 

[mruffin75]

Originally posted by: superbooga
You guys don't realize that NVIDIA can very, very easily buy AMD if it chooses to, eliminating it as a competitor.

Uh..I don't think so..

It would cost maybe...$10-15 billion at least to buy AMD (at the very least!)...

Not even Nvidia has that kind of capital to work with..

 

[DAPUNISHER]

Originally posted by: superbooga
You guys don't realize that NVIDIA can very, very easily buy AMD if it chooses to, eliminating it as a competitor.

<Mr. Hand> "Are you people all on dope?!?"</> The FTC would never allow it.

 

[NoStateofMind]

Originally posted by: apoppin

Originally posted by: Wreckage
3DFX and ATI killed themselves.

nonsense

it *appears* - now, December '07 - that the acquisition was the very best thing for both companies
--AMD's only *profitable* division this quarter is ATi
:Q

and their strategy of stealing the midrange from nvidia was brilliant
-screw the high end ... nvidia is just now learning their mistake and is copying AMD's strategy with their unprepared GT

What they also didn't realize - in their 3dfx-esque arrogance - is that many people are glad to support AMD/ATi just to not buy a card from nvidia ... i did not realize they have real fans and supporters who really want them to succeed.

i think AMD and intel are both going to bury nvidia IF they don't get their heads out of their ass and stop with their GTX-overpriced - take it-or-leave-it attitude - once-a-year bullsh!t.

:music: . . . times they are a changing:music:

:thumbsup:

 

[apoppin]

Originally posted by: superbooga
You guys don't realize that NVIDIA can very, very easily buy AMD if it chooses to, eliminating it as a competitor.

How?


nvidia is the small player now

AMD won't sell their crown jewel

 

[Stumps]

Why is it, when ever AMD has a bad product cycle, idiots cry "oh noes it's the end of AMD"....I remember reading the same thing way back when the K5 was extremely late and under performing, but AMD came though that and the K5 ended up being reasonably respectable (PR 166 and 200 were gems).

Then the same thing with the K6 and K6-2... "Oh noes AMD can't compete with intels high end P2 and new P3's" and that pretty much lasted all the way to when the K7 first made it appearance, despite the fact the the K6-3 actually had better performance (it was slighty behind in gaming however....unless you had a voodoo 2 or a pair of them ) than the first P3's.

 

[golem]

Both Nintendo and Microsoft commissioned those chips from ATI from what I understand. Each respective company paid once and owns the resulting IP. This is only good for Microsoft and Nintendo, although ATI could indirectly benefit due to optimizations for their architecture due to the vast number of console ports we see floating around nowadays, which logically could help sales of their hardware on the PC side.

what do you mean "paid once"?


[/quote]

Aren't the chips that go into the xbox made by one of the Taiwanese foundries? If this is true, then AMD would have only been paid once.

 

[apoppin]

Originally posted by: golem

Both Nintendo and Microsoft commissioned those chips from ATI from what I understand. Each respective company paid once and owns the resulting IP. This is only good for Microsoft and Nintendo, although ATI could indirectly benefit due to optimizations for their architecture due to the vast number of console ports we see floating around nowadays, which logically could help sales of their hardware on the PC side.

what do you mean "paid once"?

Aren't the chips that go into the xbox made by one of the Taiwanese foundries? If this is true, then AMD would have only been paid once.
[/quote]

you don't think there are any residuals?

AFAIK, their 'deal' is something only AMD or MS can really comment on .. i don't think there are any public details ... nothing i can find

 

[taltamir]

Originally posted by: blehman84
Hold up one second here, I agree that gross profit is an important figure, but I'm a little confused about what you're saying here. You just said it's important not to look at other operating costs like RnD and management costs because those are not indicative of the condition of the company? But didn't you just post this:

Originally posted by: taltamir

http://finance.yahoo.com/q/is?s=AMD&annual
AMD's books don't look too hot either... in 06 they manage to sell for a total of 5 billion revenue at about 100% profit (ie, their cost is half the price they are selling for) so they got a total of 2.5 billion... but half of it went to rnd, half went to operational costs and they were left with a loss of 47 million dollars.

If you're saying that R&D and other costs after gross profit are not indicative of the condition of the company, how come you are saying AMD isn't looking too hot, when their gross margin in the last annual period is better than Nvidias (AMD gross profit is 49.4% of revenue, while Nvidia's gross profit is only 42.4%)?

If gross profit is the best indicator of the condition of a company, as you seem to be saying, AMD is actually in great condition considering that they have a better gross margin than Nvidia.

In that instance I was comparing AMD to Intel... AMD took in 5 bil, at the cost of revenue of 2.5 bil... and the leftover gross profit of 2.5 bil was split 1.25 for research, 1.25 for operating, and 40 mil in total losses.
Intel on the other hand took in 30+ bil. Was left with a gross profit of 17bil. Spent 6 bil on research (4 times the amount of AMD) 6 bil on operational costs, and 5 bil was passed to shareholders.

I cannot make a straightforward comparison between AMD to nvidia since nvidia only makes video chips, AMD makes video chips and cpu chips... Also AMD has been cutting down on their research costs, while intel is slowly increasing it and nvidia practically doubled it from last.

Please keep in mind that when I say "gross profit is the most important" it doesn't mean that I automatically assume everything else is meaningless.

Originally posted by: mruffin75

Originally posted by: taltamir
Yea times ARE changing.. for example nvidia just managed to break 1 billion dollars profit...
A company is about making money, and nvidia makes lots and lots of money... more money = ability to buy companies (like say, buying via for a x86 license), equipment (build another fab?), and hire researchers (lets develop an even BETTER product)...

I don't think Nvidia will ever try and produce their own CPU.. VIA is only into low power/low performance CPU's that are used in small cases... they're nowhere *near* AMD/Intel..at all!

To get them up to AMD/Intel performance levels they'd have to invest a *lot* of money... (read billions)..

And build *another* fab? AFAIK Nvidia don't own *any* fabs?? Don't they get all their GPU's from TSMC?? Just like ATI?

And just to correct you, it wasn't a billion dollars *profit*...it was a billion dollars in revenue.. their actual profit was 235 million.

No, their revenue was 3.3 billion (not 1 billion). their GROSS PROFIT was 1.3 billion. They spent ~250 million on operational costs and almost DOUBLED their research expense from the previous year, leaving them with 230 million in cash in the bank. They didn't HAVE to double their research investment, it would have shown a greater "net profit" if they had done so, but thinking of the future they went ahead and doubled it.

 

[coldpower27]

Originally posted by: taltamir

Originally posted by: mruffin75

Originally posted by: taltamir
Yea times ARE changing.. for example nvidia just managed to break 1 billion dollars profit...
A company is about making money, and nvidia makes lots and lots of money... more money = ability to buy companies (like say, buying via for a x86 license), equipment (build another fab?), and hire researchers (lets develop an even BETTER product)...

I don't think Nvidia will ever try and produce their own CPU.. VIA is only into low power/low performance CPU's that are used in small cases... they're nowhere *near* AMD/Intel..at all!

To get them up to AMD/Intel performance levels they'd have to invest a *lot* of money... (read billions)..

And build *another* fab? AFAIK Nvidia don't own *any* fabs?? Don't they get all their GPU's from TSMC?? Just like ATI?

And just to correct you, it wasn't a billion dollars *profit*...it was a billion dollars in revenue.. their actual profit was 235 million.

No, their revenue was 3.3 billion (not 1 billion). their GROSS PROFIT was 1.3 billion. They spent ~250 million on operational costs and almost DOUBLED their research expense from the previous year, leaving them with 230 million in cash in the bank. They didn't HAVE to double their research investment, it would have shown a greater "net profit" if they had done so, but thinking of the future they went ahead and doubled it.

Taltamir you need to specify that your are talking about the last 12 months in reference to Nvidia making 1 Billion dollars in Net Income, with 3.3 Billion Revenue. Because as we know for Q3 2007, which the other guy is talking about Nvidia did indeed have their first 1 Billion dollars in Revenue for a Single Quarter.

 

[taltamir]

http://en.expreview.com/?p=64

The 8800GT 256MB is out... and AMD got served hardcore! Well, AMD will probably slash prices to match, further lowering their profits, further diminishing their budget for future research and development.

 

[superbooga]

Originally posted by: apoppin

Originally posted by: superbooga
You guys don't realize that NVIDIA can very, very easily buy AMD if it chooses to, eliminating it as a competitor.

How?


nvidia is the small player now

AMD won't sell their crown jewel

Nvidia isn't the small player.. it has 19B in market cap vs 5B for AMD.