NVIDIA Corporation announced its second quarter of fiscal 2002 results. Their financial performance appeared to be quite low through the quarter ended due to weak computer market and write down a lot of already made products.

During the quarter, NVIDIA succeeded in selling its chips for the total sum of $427.3 million. The total revenue increased 64% compared to the results of the same period last year. Although NVIDIA can celebrate the growth of its business, they should also concern about their incomes falling down. Actual net income for the second quarter of fiscal 2003 was $5.3 million, or $0.03 per diluted share, while last year this figure reached $32.9 million, or $0.19 per diluted share. Comparing this numbers I should say that NVIDIA`s gross margins decreased seriously from 12.65% to 1.24%.

In their off the record conversations, NVIDIA representatives told that sliding profits are the result of massive write off certain XBOX and nForce components of total worth reaching about $21 million.

In fact, it is no surprise that NVIDIA performs this year not as good as in fiscal 2002. A year ago their main rival ATI Technologies was not as strong as it has become today and was not able to offer solutions that could be compared to NVIDIA’s in terms of price/performance ratio. Moreover, at the end of the year 2001, several graphics cards manufacturers left NVIDIA to join the so-called ATI camp, Gigabyte Technology and Hercules, for instance; so, now the company from Santa Clara has less manufacturing and reselling partners. Finally, present market conditions are far from being favourable and ASPs (average selling prices) continue to decline causing the revenues to fall down even more.

During the conference call NVIDIA’s CEO also added that his company is cautious about its third and fourth quarter results, however, they are very confident about the longer-term future. Keeping in mind what we already know about NV30 and NV31, I can fully agree with the head of the most successful graphics chip supplier.