Nvidia: Stunning 4Q miss amid weak demand; inventory glut

Nvidia on Tuesday delivered one whopper of a revenue miss. The company said its fourth quarter revenue will fall 40 percent to 50 percent sequentially.

Let's do the math (see the company's terse warning, Techmeme). Nvidia reported third quarter revenue of $897.6 million. Cut that in half and you get $448.8 million as a worst case scenario and a best case of $538.5 million.

In either scenario, Nvidia's fourth quarter is a trainwreck. Wall Street was expecting revenue of about $805.5 million for the quarter ending Jan. 25.

Here's a look at Nvidia's revenue slide over the last five quarter (Jan. 09 quarter based on Nvidia guidance):

Nvidia (all resources) said that the revenue decline was "a result of further weakness in end-user demand and inventory reductions by NVIDIA's channel partners in the global PC supply chain."

Simply put, Nvidia has too many graphic chips and no one wants to buy them. Toss in pricing pressure from AMD's ATI unit and Nvidia is in a vice.

Oddly enough Nvidia shares are up. That fact either indicates that the warning was priced in or there's one helluva short squeeze going on. I'll post a chart once the early fireworks settle down.