Nvidia hit by Icera, Shield recall costs

August 7, 2015 // 11:52 a.m.

Tags: #costs #financial #icera #jen-hsun-huang #nvidia #project-shield #recall #shield-tablet

Nvidia has published its latest financial results, and despite taking a serious hit on the recall of faulty Shield Tablet devices the company has beaten expectations with a five per cent boost in revenue year-on-year - a fact which has failed to rescue the company from an 80 per cent drop in net income.

In the company's latest financial announcement, for the second quarter of its 2016 financial year, the company boasted of $1.153 billion in revenue, up five per cent on the same period last year. While it comes with a slight drop in gross margin, from 56.1 per cent last year to 55 per cent this year, the bigger news was an 80 per cent drop in net income from $128 million to $26 million - thanks in part to the recall of Shield Tablet devices due to a fault which puts users at risk of fire.

A bigger impact on the bottom line came from the company's decision to wind down its Briston-based Icera mobile modem business unit, which it announced back in May a mere four years after buying the 500-strong company for $367 million. While the company had looked to sell off the business unit, it claims no 'viable buyer' could be found and so its closure comes as an entire loss.

'Our strong performance in a challenging environment reflects Nvidia's success in creating specialised visual computing platforms targeted at important growth markets,' boasted Jen-Hsun Huang, president and chief executive officer, of Nvidia's results. 'Our gaming platforms continue to be fuelled by growth in multiple vectors - new technologies like 4K and VR, blockbuster games with amazing production values, and increasing worldwide fan engagement in e-sports. We're working with more than 50 companies that are exploring Nvidia Drive to enable self-driving cars, and our GPU-accelerated data centre platform continues to make great strides in some of today's most important computing initiatives - cloud-based virtualisation and high performance computing applications like deep learning.'

Nvidia is predicting further growth to $1.18 billion for the next quarter, with a return to a profit margin on 56.2 to 56.5 per cent, but warns that a further $15 million to $25 million restructuring charge will again have an impact on the company's bottom line as it enters the second half of its financial year.
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