NVIDIA 2010 Annual Report Download - page 51

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Item
1A. Risk Factors”, “Item 6. Selected Financial Data”, our Consolidated Financial Statements and related Notes thereto, as well as
other cautionary statements and risks described elsewhere in this Annual Report on Form 10-K, before deciding to purchase, hold or
sell shares of our common stock.
Overview
Our Company
NVIDIA Corporation helped awaken the world to the power of computer graphics when it invented the graphics processor unit, or
GPU, in 1999. Expertise in programmable GPUs has led to breakthroughs in parallel processing which make supercomputing
inexpensive and widely accessible. We serve the entertainment and consumer market with our GeForce graphics products, the
professional design and visualization market with our Quadro graphics products, the high-performance computing market with our
Tesla computing solutions products, and the mobile computing market with our Tegra system-on-a-chip products. During the last
several fiscal years, we have operated and reported four major product-line operating segments: the GPU business, the professional
solutions business, or PSB, the media and communications processor, or MCP, business, and the consumer products business, or CPB.
However, effective with the first quarter of fiscal year 2011, we will no longer separate our MCP and GPU operating segments as such
segmentation will no longer be reflective of the way we manage those businesses.
Our GPU business is comprised primarily of our GeForce products that support desktop and notebook personal computers, or PCs, in
addition to memory products. Our PSB is comprised of our NVIDIA Quadro professional workstation products and other professional
graphics products, including our NVIDIA Tesla high-performance computing products. Our MCP business, as we have reported it
through fiscal year 2010, has been comprised primarily of ION mGPU products. Our ION family of products addresses the integrated
core logic market. Our CPB is comprised of our Tegra mobile products that support tablets and smartbooks, smartphones, personal
media players, or PMPs, internet television, automotive navigation, and other similar devices. CPB also includes license, royalty, other
revenue and associated costs related to video game consoles and other digital consumer electronics devices. Original equipment
manufacturers, original design manufacturers, add-in-card manufacturers, system builders and consumer electronics companies
worldwide utilize our processors as a core component of their entertainment, business and professional solutions.
We were incorporated in California in April 1993 and reincorporated in Delaware in April 1998. Our headquarter facilities are in
Santa Clara, California. Our Internet address is www.nvidia.com. The contents of our website are not a part of this Form 10-K.
Recent Developments, Future Objectives and Challenges
GPU Business
During fiscal year 2010, we introduced our next generation CUDA GPU architecture, codenamed “Fermi”. We expect the Fermi
architecture to be the foundation for computational GPUs, and to enable breakthroughs in both graphics and parallel computing.
During fiscal year 2010, we also delivered our first 40nm GPUs to customers. Because of limited 40nm wafer foundry capacity,
plus supplier challenges related to 40nm process manufacturing yields, we have been forced to allocate our available 40nm product
supply among our customers. We are currently working with our foundry partners to address these challenges.
Professional Solutions Business
Corporate demand, which comprises a substantial percentage of the demand for our professional workstation products, has
recently shown some signs of economic recovery. Workstation product revenue currently comprises a significant portion of our total
PSB revenue. Therefore, if corporate demand continues to recover, we expect this trend to continue to have a positive impact on our
overall gross profit and gross margin, as the gross margin experienced by our PSB is generally higher than our overall gross margin.
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Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠