Nvidia's fourth quarter dismal; Worse than expected

Nvidia told Wall Street that its fourth quarter would be bad. It turned out to be worse. 

Last month, Nvidia warned that its fourth quarter would be a disaster. Nevertheless, analysts didn't cut estimates by enough as Nvidia's loss was worse than expected. 

The graphic chip company reported a net loss of $147.7 million, or 27 cents a share, on revenue of $481.1 million, down 60 percent from the $1.2 billion in sales a year ago (statement). Excluding various charges, Nvidia a loss of $94.4 million, or 18 cents a share. Wall Street was expecting a loss of 11 cents a share. 

For fiscal 2008, Nvidia reported a net loss of $30 million, or 5 cents a share, on revenue of $3.4 billion. In 2007, Nvidia reported net income of $797.6 million, or $1.31 a share, on revenue of $4.1 billion. 

Nvidia was hit with a perfect storm. Product miscues that led to higher warranty costs, pricing pressure from AMD's ATI unit and demand that disappeared in the fourth quarter. 

Nvidia CEO Jen-Hsun Huang said:

The environment is clearly difficult and uncertain. Our first priority is to set an operating expense level that balances cash conservation while allowing us to continue to invest in initiatives that are of great importance to the market and in which we believe we have industry leadership. We have initiatives in all areas to reduce operating expenses.

Nevertheless, Huang said that fiscal 2009 was a good year for innovation. The problem is no one is buying that innovation. 

Indeed, Nvidia's inventories as of Jan. 25 were $537.8 million, up from $358.5 million a year ago. Meanwhile, net accounts receivables have plunged to $318.4 million as of Jan. 25, down from $666.4 million for the same period a year ago.