Nvidia on Friday reported a fairly substantial sequential decline in profits for its first fiscal quarter of the year but offered a bright outlook as the company continues to roll out its highly regarded new GPU architecture code named Kepler across more product lines throughout 2012.
Kepler, the 12th generation of Nvidia's graphics processor architecture, is the successor to the Fermi architecture the company has been designing its products around since 2010.
The graphics chip maker reported revenue of $925 million for the quarter ending on April 29, down just 3 percent from previous quarter. That was a pretty good showing given the seasonal boost in sales usually associated with the holiday quarter, but a sequential net income dip of nearly 48 percent—from $116 million in the fourth quarter to $60.4 million in the first—was more worrisome.
Nvidia attributed part of that decline in profits to higher operating expenses and lower gross margins, while pointing to positive signs that its mainstream PC and mobile product lines would drive good growth going forward.
"Kepler GPUs are accelerating our business," said Nvidia president and chief executive Jen-Hsun Huang in a statement. "Our newly launched desktop products are winning some of the best reviews we've ever had. Notebook GPUs had a record quarter. And Tegra is on a growth track again, driven by great mobile device wins and the upcoming Windows on ARM launch."
Nvidia introduced its next-generation Kepler architecture in a series of mainstream GeForce GPUs towards the end of the first quarter. Those products included the GeForce GTX 670, GeForce GTX 680, and dual‐GPU GeForce GTX 690 for desktops, and the GeForce 600M lineup for laptops.
Patrick Moorhead, lead analyst for Moor Insights & Strategy, expected Nvidia to have a good story to tell when it brings the Kepler architecture into both its Quadro lineup of graphics cards for professional workstations and Tesla range of products used in high-performance compute (HPC) systems, supercomputers, and other scientific computing installations.
"Anything they can do to move Kepler into all parts of their businesses is good for them. Kepler is a very solid architecture," Moorhead said.
The analyst expected Nvidia to eventually "waterfall" Kepler down to its Tegra line of ARM-based System-on-a-Chip products for mobile devices like smartphones and tablets, though it wasn't clear if that will happen this year or in 2013.
Kepler or no, Tegra performed particularly well for Nvidia in the first quarter. The company's Tegra 3 SoCs made a decent splash in tablets last year but this year, they're starting to turn up in smartphones as well.
"Graphics is more important than ever," Jen-Hsun said. "Look for exciting news next week at the [Nvidia-hosted] GPU Technology Conference as we reveal new ways that the GPU will enhance mobile and cloud computing."
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