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BY CNA team - November 16, 2018

News 0

Nvidia’s post-crypto hangover affects Q3 performance

Nvidia CEO Jensen Huang
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The prolonged slump in bitcoin’s price has turned many away from mining the cryptocurrency and that in turn has crimped demand for mining rigs.

The sales of chips specific to these rigs have also been affected with Santa Clara, California-based chipmaker Nvidia’s CEO Jensen Huang telling Reuters that provisions for unsold inventories weighed on the company’s third quarter ended Oct 31 financial performance.

That in turn saw the company posting a third quarter that missed expectations.

Jensen explained that while the crypto frenzy drove even gaming cards’ prices up and put off some buyers, demand did not pick up even after prices came down.

The company, best known for making graphics chips for games, is now sitting on inventory in warehouses and that provisions expanded five-fold for the quarter under review to US$70mil, with provisions tripling for the first nine months to US$124mil.

“The crypto hangover lasted longer than we expected,” Huang says during a conference call. “We thought we had done a better job managing the cryptocurrency dynamics,” he adds, admitting that the process has been slower than expected.

However, Huang says inventories will start to normalise by the end of the current quarter.

The company posted a 47% jump in net earnings to US$838mil compared to the same quarter a year ago.

Revenue for the quarter under review rose 21% to US$3.18bil and was up 2% from the previous quarter.

The company’s board announced a 7% increase in the quarterly cash dividend to 16 US cents per share to be paid out with the next quarterly cash dividend on Dec 21 to all shareholders of record on Nov 30.

It also intend to return an additional US$3bil to shareholders by the end of financial year ended Jan 31, 2020 (FY20), which may begin in the fourth quarter of FY19.





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