nVidia is pissed at MS

NVDA; $35.44; D-2-1-9
Volatility Risk: High
• Reported EPS (Jan): 2002A $1.14; 2003E $1.94; 2004E $2.19
• NVIDIA co-founder and CEO Jen-Hsun Huang delivered comments at
Hardware Heaven on 1 May that gave special emphasis to the company’s
push into new markets, most notably integrated graphics and notebooks.
Recently released market share data show NVIDIA making headway in
both markets.
• No new detail was forthcoming on finances, given the fact that the company
just released a revised April quarter outlook earlier this week. Our own
view, which is that NVIDIA is likely to see sequential growth in the mid
single digits for the July 2002 quarter, remains unchanged.
• Jen-Hsun made it clear that he is not likely to ship more MCPX (one of the
two chips that NVIDIA is supplying for the Xbox) to Microsoft without
resolution of the pricing dispute. We think it’s highly likely that some
agreement will be reached – Microsoft cannot find an alternative supplier
in 60 days. Indeed, we note that having another vendor engineer a
replacement part would take a long time, probably a year to 18 months.
• NVIDIA talked a little bit about its plans to release an updated architecture
in August. We think it’s more likely that the benefits of the release will flow
to the January 2003 quarter as opposed to the October 2002 quarter, but
the result should be the same – improved ASPs. We believe that NVIDIA is
likely to see mid to high single digit revenue growth in the January 2003
quarter as a result.
• NVIDIA’s stock, at $35, is attractively valued even if revenue and earnings
undershoot our relatively conservative estimates. We’ve calculated that
earnings for the January 2003 fiscal year would be in the $1.70 to $1.80
range even if NVIDIA stops shipping XBox parts entirely for the latter half
of the fiscal year, which still puts the stock on 20x multiple, one of the
lowest in our universe of coverage.
• We reiterate our intermediate-term buy and long-term strong buy ratings.

MS better stand down or they will have no more chipsets to go with the black toolbox

On the one hand, I can *sorta* see M$\'s point of view.  They have to cut box prices, which means more money lost.  If NVidia takes a bit of a profit hit, M$ looses more money.  On the other hand, NVidia isn\'t a subsidiary, they shouldn\'t have to eat any loss at all.  If M$ wants their very nice chip, NV should definitely make M$ pay the agreed upon price for it.

Didn\'t we discuse this in the Nvdia VS MS thread:sleepy: :yawn:

yes we did, but this new possiblity that Nvidia could stop shipping chips to MS all together is brand new, and VERY dammaging to MS if it happens.

M$ dont\' need nVidia, they can always buy back old 286/386\'s and rip the chipset + Graphics out of them and put the LunchBox together, for an even better price performance :eek:

[GmanJoe]

"NO MO CHIPS, Mistah Gates!"

So...what\'s gonna happen to the "But it looks better on Xbox" people if MS doesn\'t pay up (which would make the $199 Xbox hurt more)?

Originally posted by QuDDus
Didn\'t we discuse this in the Nvdia VS MS thread

Yeah we did but this is confirmation about it.

now every one get ready to give a big belly laugh as the horrible ..big and UGLY console runs out of Suppliers ?

Ready ?