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Q1 2012 Earnings Call
May 12, 2011 5:00 pm ET
Michael Hara - Senior Vice President of Investor Relations & Communications
Karen Burns - Interim Chief Financial Officer
Jen-Hsun Huang - Co-Founder, Chief Executive Officer, President and Director
Craig Berger - FBR Capital Markets & Co.
Michael McConnell - Pacific Crest Securities, Inc.
Glen Yeung - Citigroup Inc
James Schneider - Goldman Sachs Group Inc.
Daniel Berenbaum - Auriga USA LLC
Alex Gauna - JMP Securities LLC
Christopher Caso - Susquehanna Financial Group, LLLP
Vivek Arya - BofA Merrill Lynch
Romit Shah - Nomura Securities Co. Ltd.
Unknown Analyst -
Arnab Chanda - Roth Capital Partners, LLC
Previous Statements by NVDA
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Thank you, Doris. And good afternoon, and welcome to NVIDIA's Conference Call for the First Quarter of Fiscal 2012. With me on the call today from NVIDIA are Jen-Hsun Huang, President and Chief Executive Officer; and Karen Burns, Interim Chief Financial Officer. After our prepared remarks, we will open the call to a question-and-answer session. Please limit yourself to one initial question with one follow-up.
Before we begin, I would like to remind you that today's call is being webcast live on NVIDIA's investor website and is also being recorded. A replay of the conference call will be available via telephone until May 19, 2011, and the webcast will be available for replay until our conference call to discuss our financial results for our second quarter fiscal 2012. The content of today's conference call is NVIDIA's property and cannot be reproduced or transcribed without our prior written consent.
During the course of this call, we may make forward-looking statements based on current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, and our actual results may differ materially. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's earnings release, our Form 10-K for the fiscal period ended January 30, 2011, and the reports we may file from time to time on Form 8-K filed with the Securities and Exchange Commission.
All of our statements are made as of today, May 12, 2011, based on information available to us as of today, and except as required by law, we assume no obligation to update any such statements. Unless otherwise noted, all references to market research and market share numbers throughout the call come from Mercury Research or Jon Peddie Research.
With that, let's begin. Our desktop and notebook GPU product lines exceeded internal expectations for Q1. In our Desktop business, we continue to be well-positioned in the Performance and Enthusiast categories and continue to see good momentum in China. We added to both ends of our product lineup with the additions of the GeForce GTX 550 Ti and the GeForce GTX 590. The GTX 550 Ti is the best entry-level gaming GPU for the next generation Intel systems and the GTX 590 is simply the fastest dual GPU add-in card for enthusiasts. Jon Peddie stated in Tech Watch, "The GeForce GTX 590 is the best Overall add-in board in every parameter we measure. Compared to other dual GPU add-in boards and dual add-in GPU boards, it has the highest performance per watt, the highest performance per dollar, the lowest power consumption, the lowest noise, the biggest gain from over-clocking and the best Pmark, regular or over-clocked."
The X11 GPUs continues to experience good growth, driven by a wave of great new games, such as the recent release of Crysis 2, and we still have many highly-anticipated titles yet to be released this year. In the 3D notebook GPUs, we expect to increase share on the Sandy Bridge platform. We felt this growth as Sandy Bridge started to ramp in April. The Sandy Bridge transition is expected to reach the 75% crossover point exiting in the second quarter and should drive another increase in both our revenue and share in the notebook GPU segment as a result.
Our Consumer Products business, which includes Tegra processors and embedded products achieved record revenue of over $122 million. The record performance is due to our first group of Tegra 2-based Android products hitting the market. Among them are the MOTOROLA ATRIX and LG Optimus 2X super phone, as well as tablets like the MOTOROLA XOOM, LG Optimus Pad and G-Slate, the ASUS Eee Transformer, Dell Streak and the Acer Iconia A500. The second wave of super phones and tablets from Acer, Motorola, Toshiba and Samsung, are expected to ship in Q2.
In addition, Sony announced that their S1 and S2 tablet projects will be used in Tegra 2. Based on market research from In-Stat, tablets represents the fastest-growing segment for mobile processors, with a compound annual growth rate of 124% from 2009 to 2014. We continue to drive the lead role in the Android tablet market, and expect to further solidify that position with our next generation project Kal-El base tablets hitting consumer shelves later this year.
We announced this week that we will acquire Icera, a baseband and RF Technology leader. We believe this move will further accelerate our Tegra momentum and enhance our position in mobile computing, while providing another major growth target for our company. Icera is the pioneer in next generation wireless modem technologies called software-defined radio or SDR technology. They have created an ultra-low power, high-performance processors, specifically, specially designed for processing multiple modem protocols. Icera's deep execution processor known as DXP is a programmable processor designed to execute communications algorithms in extremely low power and is super elegant and is much smaller than conventional basebands. In a way, DXP is the technical equivalent of the programmable shares we invented for GPUs, which revolutionized the graphics industry.