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August 01, 2008 – Comments (3) | RELATED TICKERS: NVDA

Alright, everybody. I just went back to the Eldrehadspicks page and looked at the scorecard. One of his picks is down > 40% (!) It's called NVIDIA (NVDA), and they're a chipmaker. They make the best graphics processors around, and their stock price is beaten down because of a price war with Intel and a one-time $200M charge based on a faulty something-or-other.

Revenues are actually dropping this quarter. That's not supposed to happen for a growth company, is it? Is it becoming a shrinkage company?

Well, I'm actually with Eldrehad on this one, and I get to be at a much lower price! With the one-time $200M charge for the faulty die-whatever, we see that there might have been good reason for an enormous amount of liquid assets on their balance sheet (a concern for Eldrehad: don't ask, he's way smarter than you or I). The discussion on his blog (where my comment may look familiar to you) gives me confidence in the one thing I doubted about NVDA: its position amongst its competitors.

I'm ready, I'll be buying some NVDA (or, if I'm feeling frisky, calls) soon. See ya on Easy Street.

3 Comments – Post Your Own

#1) On August 01, 2008 at 11:30 PM, CMFEldrehad (99.99) wrote:

Good luck!

Oh, and by the way, while I thank you wholeheartedly for your kind words, I have been known to get them wrong from time to time.

*cough* Dry Ships *cough*

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#2) On August 02, 2008 at 5:23 AM, AnomaLee (28.54) wrote:

I love Nvidia's products over their competitor ATI(owned by AMD), but I wouldn't feel safe betting on Nvidia. I actually think their write-downs were very modest. The release of their latest GPU's were a total disaster way before their earnings release. Complications with software support for Windows Vista are making it worse and discouraging gamers from buying the latest GPU's as gamers have been reluctant to upgrade to Windows Vista.

Developers are still not taking advantage of DX10 and fully utilizing hardware capabilities. The next generation graphic engine is too far out to help them today. SLI capability and support are still dreadful and lacking. It's almost as pointless as an office worker buying the latest quad-core CPU's when software developers are not transitioning fast enough to utilize multi-thread capabilities.

More people are transitioning away from traditional desktops to laptops where the GPU is integrated with the motherboard and there is greater competition, less moat and less margin. 

I don't think they're going away. In this spce I think they will do a M&A but that can be disastrous for investors. I would only build a position around the stock if I were using my arch-nemesis' money. 

When I think of all of these things I can't believe i didn't red-thumb this thing months ago. Maybe it's worth a gamble as a speculative turnaround.

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#3) On August 04, 2008 at 11:49 AM, FleaBagger (27.32) wrote:

You're right, Lee. It's like WNR (WieNeR). There's a lot to be scared of, but it's cheap and potentially really profitable. The scariness has just made it cheaper and yummier. But I'm young and single, so I tend to see things differently.

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