Q4 2012 Earnings Call
February 15, 2012 5:00 pm ET
Rob Csongor -
Karen Burns - Interim Chief Financial Officer
Jen-Hsun Huang - Co-Founder, Chief Executive Officer, President and Director
JoAnne Feeney - Longbow Research LLC
Christopher Caso - Susquehanna Financial Group, LLLP, Research Division
Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division
Kevin Cassidy - Stifel, Nicolaus & Co., Inc., Research Division
Craig A. Ellis - Caris & Company, Inc., Research Division
Brian C. Peterson - Raymond James & Associates, Inc., Research Division
Deepon Nag - Macquarie Research
James Schneider - Goldman Sachs Group Inc., Research Division
Alex Gauna - JMP Securities LLC, Research Division
Patrick Wang - Evercore Partners Inc., Research Division
Vivek Arya - BofA Merrill Lynch, Research Division
Glen Yeung - Citigroup Inc, Research Division
Craig Berger - FBR Capital Markets & Co., Research Division
Rajvindra S. Gill - Needham & Company, LLC, Research Division
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Thank you. Good afternoon, and welcome to NVIDIA's conference call on annual and fourth quarter of fiscal 2012 results.
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 up the call to a question-and-answer session. [Operator Instructions].
Before we begin, I'd like to remind you that today's call is being webcast live on NVIDIA's Investor Relations website and is also being recorded. A replay of the conference call will be available via telephone until February 22, 2012, and the webcast will be available for replay until our conference call to discuss our financial results for our first quarter of fiscal 2013. 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-Q for the quarterly period ended October 30, 2011, and the reports we may file from time to time on Form 8-K filed with the Securities and Exchange Commission.
All our statements are made as of today, February 15, 2012, 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 or otherwise noted, all references to market research and market share numbers throughout the call come from Mercury Research or Jon Peddie Research.
During this call, we will discuss non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures to GAAP financial measures in our financial release, which is posted on our website or in the case of our fiscal year 2013 outlook, the reconciliation is posted on our Investor Relations website.
With that, let's begin. After 5 consecutive quarters of sequential revenue growth, fourth quarter revenue was negatively impacted by the global disk drive shortage caused by the flooding in Thailand, which affected the mainstream GPU segment more than anticipated. Shipments by some PC OEMs were reduced, and higher disk drive prices constrained the ability of some PC OEMs to include a GPU in their systems. Additionally, the Tegra 2 mobile business declined more rapidly than expected ahead of devices based on the Tegra 3 processor ramping into production in the first quarter of calendar year 2012.
However, despite tough economic conditions and the exiting of our chipset business, NVIDIA recorded very good results for our full fiscal year 2012. First, our overall GP -- our overall business grew 33%, excluding the chipset business we've been exiting. Discrete GPUs, including GeForce, Quadro and Tesla grew sharply over the year. GPU attach rates remained strong at 53% of consumer PCs and 36% overall, according to Mercury Research data.
A resurgent PC gaming market saw games like Battlefield 3 and Modern Warfare 3 record over $1 billion in sales in their first week on the shelves. At the time of the launch of Battlefield 3, over 80% of gamers were below the recommended hardware specification to play the game, driving a significant increase in gamer GPU revenues over the year.
Our Professional Solutions Business had a record revenue year driven by large adoption of the Fermi generation of Quadro workstation products, as well as growth in emerging design economies such as India and China. Our Tesla products were selected to power the world's fastest supercomputers, including Oak Ridge National Laboratory's upcoming Titan supercomputer. In addition, we made major strides in speeding up GPU computing applications support and code porting through our open HPC and directives initiatives.
And in one of our most important achievements for the year, we established a position in the mobile market. Tegra products captured share in Tier 1 tablets and smartphones. Over the course of the year, Tegra products shipped in 14 phones, 34 tablets and in 18 of the top 20 carriers. We designed and shipped 3 generations of Android devices. With Tegra 2, we were the first to ship dual-core mobile processors. And now with Tegra 3, we are the first to ship quad-core processors. The Tegra mobile processor has grown into a multi-hundred million dollar business.