nVidia will soon announce its financial results for first quarter of 2009 [1Q'09] and Wall Street expects that the company will report higher results than nVidia’s original pre-announcement. Analyst firm Wedbush Morgan Securities went as far as stating that the company will be "significantly ahead of the Street". But, this is where the good news ends.
Risks for 2Q involve nVidia’s trailing position in its switch to 40nm – analysts expect that the "damn the torpedoes, full speed ahead" approach on the GT300 architecture backfired on the volume 40nm parts, that are nothing else but yet another die-shrink of two year old G92 architecture. GT212, GT216 and GT218 turned out to be a disappointment for the analysts, as nVidia was unable to create a mainstream and low-end models based on real GT200 architecture, and resorted to cheap renames.
The punishment comes in the form of a stock downgrade, or something that not a single publicly-listed company wants to hear. Senior Semiconductor Analyst Patrick Wang stated that the move by his firm is guided by "belief that NVIDIA’s trailing position at 40nm adds some risk to the story. As such, we move to a neutral rating and look for evidence of meaningful revenue catalysts and / or evidence of sustainable margin expansion before turning more positive."
E.g. What goes around, comes around. The firm went to state that 2Q revenue will modestly grow "as OEMs and channel partners continue to re-correct inventory levels", but the product mix should influence the bottom line, as cash-cow Quadro business is under pressure from ATI’s FirePro series, and general weakness in the commercial market segment.