NVIDIA 2007 Annual Report Download - page 48

Fiscal Years Ended January 28, 2007, January 29, 2006, and January 30, 2005.
Revenue
We report financial information for four product−line operating segments to our Chief Executive Officer, who is considered to
be our chief operating decision maker, as follows: the GPU Business, the MCP Business, the Handheld GPU Business, and the
Consumer Electronics Business. Revenue in the "All Other" category is primarily derived from sales of memory devices. Please refer
to Note 14 of our Notes to Consolidated Financial Statements for further information.
Fiscal 2005 was a 53−week year, compared to fiscal years 2007 and 2006 which were 52−week years, and we believe that this
extra week may have had a positive impact on our revenue in fiscal 2005. However, we are not able to quantify the effect of the
slightly longer year on our fiscal 2005 revenue.
Fiscal Year 2007 vs. Fiscal Year 2006
Revenue was $3.07 billion for fiscal 2007, compared to $2.38 billion for fiscal 2006, which represents an increase of 29.2%. A
discussion of our revenue results for each of our operating segments is as follows:
GPU Business. GPU Business revenue increased by 20.3% to $1.99 billion for fiscal 2007, compared to $1.66 billion for fiscal
2006. The increase was a result of increased sales of our desktop GPU products, notebook products and our NVIDIA professional
workstation products. The increase in sales of our desktop GPU products was led by our GeForce 7−based and GeForce 8−based
products that serve the high−end segment. Sales of our NVIDIA notebook products improved due to an increased mix of GeForce
7−based products, shipping for notebook PC design wins based on Intel's Napa platform. This increase in sales was slightly offset by a
decrease in average selling prices. Our NVIDIA professional workstation product sales increased due to an increase in unit shipments,
offset by a slight decrease in average selling prices.
MCP Business. MCP Business revenue was $661.5 million for fiscal 2007, compared to $352.3 million for fiscal 2006, which
represents an increase of 87.8%. The overall increase in MCP business revenue is primarily due to sales of newer NVIDIA nForce4
products, NVIDIA nForce5 products, integrated AMD−based desktop products, and integrated Intel−based desktop products, which
began shipping after the second quarter of fiscal 2007. In addition, revenue also increased as a result of our acquisition of ULi in
February 2006.
Handheld GPU Business. Handheld GPU Business revenue was $108.5 million for fiscal 2007, compared to $58.7 million for
fiscal 2006, which represents an increase of 84.7%. The overall increase in Handheld GPU Business revenue is due to an increase in
unit sales of high−end feature cellular phone and PDA products.
Consumer Electronics Business. Consumer Electronics Business revenue was $96.3 million for fiscal 2007, compared to $167.4
million for fiscal 2006, which represents a decrease of 42.5%. This decrease is a result of discontinued sales of our Xbox−related
products to Microsoft, partially offset by revenue recognized from our contractual development arrangements. We recognized revenue
from the sale of our Xbox−related products to Microsoft for the last time during the second quarter of fiscal 2006. During fiscal 2007,
we recognized $92.9 million of revenue from our contractual arrangements with SCE for its PlayStation3, compared to $49.0 million
of revenue recognized during fiscal 2006.
For the first quarter of fiscal 2008, we expect a seasonal decline associated with the PC business. Although we believe our market
and competitive position in each of our business units continues to be strong, there are no significant industry growth drivers to offset
seasonality. Microsoft's next generation operating system, Microsoft Windows Vista, or Vista, has shipped. We believe that Vista is
the first operating system to present, as a standard, the power of the GPU to all applications and that, in the future, a significant
percentage of PCs will have Vista. With Vista, DX10, and HD/Blu−ray DVD as the technologies for PCs for the coming year, we
believe that 3D graphics will become a central part of the computing experience and that the GPU will be more important than ever.
However, to date we have not seen a significant impact from the launch of Vista.
Fiscal Year 2006 vs. Fiscal Year 2005
Revenue was $2.38 billion for fiscal 2006, compared to $2.01 billion for fiscal 2005, which represents an increase of 18.2%. A
discussion of our revenue results for each of our operating segments is as follows:
GPU Business. GPU Business revenue increased by 22.9% to $1.66 billion for fiscal 2006 compared to $1.35 billion for fiscal
2005. The increase was the result of increased sales of our GeForce 6 and GeForce 7 families of desktop GPUs that serve the
high−end GPU segment, offset by a slight decline in sales of our mainstream GPU products. In addition, sales of our NVIDIA Quadro
professional workstation products and notebook products continued to improve due to an increased mix of GeForce 6−based and
GeForce 7−based products, which resulted in an increase in average selling prices.
40
Source: NVIDIA CORP, 10−K, March 16, 2007