Nvidia's fortunes took a turn for the worse during the quarter, as slowing sales plus faulty products never add up to anything good.
The company announced Wednesday that revenue and gross margins for its second quarter will come in below its own projections, blaming a delay in the ramp of a new product, price cuts prompted by competitive pressures, and a general economic malaise. Analysts were expecting revenue of around $1.1 billion, but revenue now will be just $875 million to $900 million for its second quarter, which ends on July 27.
And then on top of that, Nvidia will have to take a one-time charge between $150 million and $200 million to account for "a weak die/packaging material set" used with certain graphics processors and platforms in some notebooks that is causing system failures. The company claimed the problem was in the interaction between its products and the rest of the system, but said it would switch to a more sturdy material for its chip packages and work on improving the thermal management software of its products.
Nvidia has been throwing its weight around in recent months, picking a fight with Intel over the most proper way to configure a PC and expanding its efforts to develop processors for mobile devices. It now has some work to do on its core graphics products, which might give rival AMD's ATI division a chance to score some wins.