NVIDIA Corporation (NASDAQ:NVDA)

CAPS Rating: 4 out of 5

The company deals in world-wide programmable graphics processor technologies. Its major product-line operating segments are: graphics processing units, media and communications processors, handheld and consumer electronics.

Recs

42
Player Avatar tconwa1 (26.77) Submitted: 8/22/2008 1:57:56 AM : Outperform Start Price: $13.16 NVDA Score: -17.17

Nvidia is a solid company that due to a few unfortunate circumstances finds themselves valued at under 15 dollars. The stock is severely undervalued considering what happened to put them there:

1. Laptop Chip malfunction makes them take a 180 million dollar hit to fix it and then report lower earnings for the quater. NVDA is a smart company, they don't make mistakes like this, I wouldn't expect anything like this happening to them for a very long time.

2. AMD, which took over Nvidia's main competition (ATI) in 2006, pulls a fast one and instead of marketing a High end graphics card and then filtering it down to mid range and low range sister cards, as is the custom, decides to put all their product power behind a mid range card at an affordable price with a few low end and high end versions. It is a new strategy for AMD/ATI and is yet to show whether or not it will pay off, but it did accomplish one thing: Nvidia had to lower their card prices to a more competitive level subsequently lowering their earnings for the quarter.

3. For the first time since time began for Nvidia they missed a deadline. Nvidia has prided itself on always meeting deadlines and now that they have missed their first, Im sure the CEO will be pulling out all the stops to make sure it never happens again. Its just not in their nature.

_______________________________________________
Reasons to Buy NVDA:
_______________________________________________

1. The company has strong management that knows the tech side of the company just as well as it knows the financial side. They make smart investments and they learn from their mistakes. The management is known to be highly respected and extremely driven.
_______________________________________________

2. NVDA has $0 debt and about 1.66 billion in cash to spend as it pleases. Thats pretty impressive, especially since they just announced adding 1 billion into their buyback plan which would boost it to a 2.5 billion buyback. A buyback is something to definitely watch on whether or not a company delivers but with Nvidia, they are more likely to deliver than not.
_______________________________________________

3. Also, with all that extra money they have an incredible Research and Design department. They can do stuff like buy the AGEIA PhysX accelerator and incorporate that into NVDA products. PhysX software is widely adopted by over 150 games, is used by more than 10,000 developers of all types and is supported on Sony Playstation 3, Microsoft Xbox 360, Nintendo Wii and PC. And now to get it and its benefits, you have to have an Nvidia graphics card. Smart move I say, because as graphics in our age gets more and more lifelike, the physics engine and how it processes is at its core, and no other company has the industry standard built right into their products like NVDA now gets to boast.
_______________________________________________

4. With the HD video movement blowing up right before our eyes, the demand for graphics power that can handle it increases. For the first time ever, an operating system (Windows Vista) has a substantial graphics requirement. Demand for quality products that can handle the load is going nowhere but up, and currently NVDA is the only one that can deliver to par. Not trying to trash AMD/ATI here, but as an owner of products from both companies, and then considering AMD's 7 quarters straight spiral down, Nvidia is the way to go.
_______________________________________________

5. Did I mention the Sony Playstation 3 features Nvidia graphics and is considered in the gaming industry as top quality and power for graphics? In the next 4 years or so, Microsoft, Sony, and Nintendo will be looking to put out their new platforms. Who do you think they will get their graphics power from if they're trying to put out a powerhouse system? You betcha, Nvidia.
_______________________________________________

6. Not many people know about it, but Nvidia will soon be the sole reason why you're going to kick yourself for buying an Apple iPhone. Dont get me wrong, the iPhone is truly a product a class of its own, but when Nvidia releases its Tegra series you will know who to call Daddy... Watchout is all I can say. I implore you, if you are reading this go to Nvidia's main site, look under products and go to mobile, and if you didn't already know about it, prepare to change you panties. http://www.nvidia.com/page/handheld.html check it out.

Apple - basically Nvidia is breaking out into the mobile market. It's about damn time too, Im already sick with apple and there release a product a year bull just because they can and everyone will buy it.. Oh look we're making this new one affordable and cheap, and hey its on the 3G network, just sign a contract that will eventually rape you given enough time and then lets rip off software developers and make them pay out of the ass just to have a piece of the iPhone... Funny thing is, the 3G iPhone is exactly the same as the first, the main highlight being, its on the 3G network. Guess what, the 3rd one is already way in the works and the 4th ones ink just finished drying on the paper...

Sorry I ranted. I really do like the iPhone as a product, but wouldn't it be nice if a company came out with something along that premise, but with as many top notch features as possible, instead of trickling out improvements and sucking the money teet dry. Which brings me back...

Tegra Series:
“All-day media processing” - for 130 hours audio, 30 hours HD video playback
• HD image processing for advanced digital still camera and HD camcorder functions (up to 12 megapixels still shots and can encode 720p video)
• Optimized hardware support for Web 2.0 applications for a true desktop-class internet
experience
• Display support for 1080p HDMI, WSXGA+ LCD and CRT, and NTSC/PAL TV-Out
• Direct support for WiFi, disk drives, keyboard, mouse, and other peripherals
• A complete Board Support Package (BSP) to enable fast times to market for Windows Mobile-based designs

"If you had a device that could run over, say, 50 hours of audio, and maybe 4 hours of HD video and still have enough battery life left to browse the web or do email for 10’s more hours, that starts to sound like a device that would get a lot more use.
The Tegra family of computers on chip have been designed from the ground up to deliver stunning HD video, imaging capabilities, desktop class 3D graphics and more in a tightly integrated solution that burns less than a watt during even the most demanding of uses."

Read a little into the history of this chip series. Think about one of the main companies behind small chip design for the Apple iPhone that made the device possible.. Guess what, remember that 1.66 billion in cash NVDA is sittin on, yeah they bought the damn company for a couple 100 million and came together to design a knockout. Also something very exciting, Nvidia is a Microsoft Embedded Partner. The windows mobile division at microsft is designing their new mobile operating system. Guess what its based off of? You guessed it, Nvidia mobile chip designs from the Tegra series. The new windows mobile is being packed full of features that take full advantage of Tegra capabilities.

_______________________________________________

7.Take note that the Tegra Series is only one of many lines of exciting new and innovative technologies. Nvidia has made huge breakthroughs in how scientists do visual computing research on say for example black hole simulations or folding of protein strands.
_______________________________________________

In Closing:

At 14-16 dollars NVDA is a great buy, at 12-14 its a bargain. If you see it drop into the 10 or 11 range, thats a steal, dont think, just buy. For reasons discussed earlier we have the opportunity to buy a great company at discount prices. Im calling it now, NVDA will reach that $40 per share mark again. It may not be this year, it may not be next year, but it will happen... Wouldn't that be nice if you invested now while they're so cheap?

Please, all comments are welcome, I hope you enjoyed my little rant.
_______________________________________________

PS. At NVISION08, which is a huge convention hosted by Nvidia for Industry experts and Nerds alike, it is speculated that new light will be shed on the Tegra series and its consumer availability. On the short term I wonder what that will do to their stock prices in the next couple of weeks... Good thing I already bought them at 11. Im seriously considering buying more. The point of the article, you should too, what are you waiting for?

Report this Post 7 Replies
Member Avatar tconwa1 (26.77) Submitted: 8/22/2008 1:18:01 PM
Recs: 0

Tyghe,Read with interest Jason's e-mail containing your pitch about nvda , I am actually thinking about buying some.Read a few reports S&P and Morningstar and they don't like it very much.I like to buy things that wall street does not like so maybe you are onto something.They do have debt $1.1 billion according to morningstar and have heavycompetition, even Intel is trying to get into business. How big can this mobile biz get for them? As big as i-phone?If you have any more info let me know.and keep up the work maybe ananalyst job on wallstreet is in the cards.-Jon___________________________________________________________________Hey coach Jon!! Glad to hear from you, it has been a long time.As far as the mobile business goes, they are going to severely cut into the smartphone mobile market. Apple nickles and dimes people left and right, and the great thing about Nvidia is they developed this chip and will be selling it to all major phone companies. Samsung to note is one of the biggest. Since the iPhone all of the other companies have been scrambling to catch up and come out with comparable products. But none of them really do compare. This chip will give phone companies the ability to put features in their products that only really the 4th and 5th generation of iPhones would have.. Apple will have to play catchup when these many products come out. It is more a mobile computer with phone capabilities than anything else. This really will change the world in a sense; the way we do things and operate. Go to youtube.com and type in "apx 2500" to see some of their tester phones showing off just a few of the capabilities.http://www.youtube.com/watch?v=tsYFXGKUIpEPlus you have to admit it is going to be somewhat big if Microsoft Mobile builds their Windows Mobile Operating System specifically for the Nvidia Chip. What will Apple do I wonder?And as for Intel.. They are mainly processor oriented and have always been the king in that game. AMD has always been second. Intel plans on releasing I think it was called Larabee or something like that, that is supposed to replace the graphics card. Like I said before in my pitch, Nvidia bought the Physx and incorporated it. It used to be a separate card you could buy for 200 dollars to speed up your game by taking some of the processing load off of the CPU and GPU. It will be used in every major game title pretty much from now on. Nvidia is the only one to have it. Which means the other companies have to make their graphics card or processors alot stronger in order to handle to processing load. Im sure Intel's chip will be amazing, but trying to enter into the Graphics Card market is going to be tough for them. As far as that goes, Nvidia is the top dog.Another note for Intel. In business you stick with what you are good at and try not to stray. Take for example McDonalds trying to make their restaurants a little more upscale and appeal to the coffee lounge crowd. Thats going to crash and burn. McDonalds is known for Cheap Fast Food that tastes good and the colors Yellow and Red which invoke hunger. If I had to study for an exam, do you think its plausible that I would go to McDonalds buy a coffee and sit down in that kind of environment. When a friend calls up can I really see myself goin "yeah man, Im just chillin at McDonalds with my Iced Coffee studying for my Physics of Liquids class..." Intel is great at processors, but as far as their integrated graphics... They lack. They will have to pull out something truly amazing in order to compete.With Nvidia, I just imagine how much revenue they could generate from just that new chip line alone and selling to all the major phone companies, they are going to eat it up.Check this out for all of Nvidia's Content and Industry partners.. The Prospects are quite exciting.http://www.nvidia.com/object/handheld_devpartners.htmlThis one has Industry Associates:http://www.nvidia.com/object/hh_industry.html

Member Avatar denkab (34.85) Submitted: 8/25/2008 12:55:26 PM
Recs: 0

I feel it is a mistake to substitute performance of AMD's stock for performance of ATI's products. Look, the 780G integrated chipset is capable of playing HD 1080 and BluRay.On the other hand, people all over the Internet keep on asking (and not getting the answer) whether the HP, Dell laptops with failing discrete mobile NVidia parts (8400 and 8600) are being replaced with parts from the same bad batch.

Member Avatar granolabar (< 20) Submitted: 8/25/2008 3:21:02 PM
Recs: 0

tconwa1appears you have done your homework on NVDA. I'll watch the trend a little longer and make a decision. I trust your instinct on this one.granolabar

Member Avatar silversound (< 20) Submitted: 8/29/2008 1:09:59 PM
Recs: 1

I think they will continue to suffer at least till next year, just look at the news and rumors. I was suspicious when nVidia CEO keep selling his share at the beginning of the year and then ended up with a huge drop in price. In recent news, the new 9500GT cant not compete with AMD's 4670 in low end segment. As in high end, nvidia was beaten by competitor AMD's cheaper prices.PhysX and CUBA looks good but its an open source which intel and AMD can use.Another blow after the mobile chip problem, the popular desktop G92 & G94 video cards also have faulty materials in it which nvidia not yet admitted to the public. This will cost another premium to fix.http://www.tgdaily.com/content/view/39045/135Its not likely nVidia will have enough time to develop a new line of product before Chrismas, and AMD/ATi is regaining its market share. nvidia will probably recover after half a year depend on its new line of products.

Member Avatar denkab (34.85) Submitted: 10/10/2008 12:06:20 PM
Recs: 0

Apple 'fessed up to having same mobile GPU issue: http://support.apple.com/kb/TS2377Why so late? Because they love their customers so much... Scratch that: because they negotiated higher payout form NVDA, since their custom designs are certainly more expensive to replace. No insider information here, just suppositions.

Member Avatar mdioli (84.28) Submitted: 10/23/2008 3:04:20 PM
Recs: 2

Thanks, tconwa1, very thorough analysis. You've almost convinced me to pick up few shares, but there is one problem. You know what? Look at this: http://finance.yahoo.com/q/it?s=nvda . NVDA executives are dumping shares time after time - not even one purchase. I won't put my money in a company that it's own bosses are selling, even if its current price (6.30) is almost twice low from what you say "buy, don't think". What do you say?Thanks,M.

Member Avatar valunvesthere (< 20) Submitted: 12/30/2008 1:16:51 AM
Recs: 0

Acer Launches Laptop With Intel's Quad-core Chip (PC World)tech.yahoo.com/news/pcworld/acerlauncheslaptopwithintelsquadcorechipNew Quad-Core AMD and Intel Chips Surface (PC World)tech.yahoo.com/news/pcworld/newquadcoreamdandintelchipssurface

Featured Broker Partners


Advertisement