NVIDIA 2013 Annual Report Download - page 162

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If we fail to appropriately scale our operations in response to changes in demand for our existing products or to the
demand for new products requested by our customers, our business and profitability could be harmed.
To achieve our business objectives, it may be necessary from time to time for us to expand or contract our operations.
In the future, we may not be able to scale our workforce and operations in a sufficiently timely manner to respond effectively
to changes in demand for our existing products or to the demand for new products requested by our customers. In that event,
we may be unable to meet competitive challenges or exploit potential market opportunities, and our current or future business
could be materially and adversely affected. Conversely, if we expand our operations and workforce too rapidly in anticipation
of increased demand for our products, and such demand does not materialize at the pace at which we expected, the rate of
increase in our costs and operating expenses may exceed the rate of increase in our revenue, which would adversely affect
our results of operations. In addition, if such demand does not materialize at the pace which we expect, we may be required
to scale down our business through expense and headcount reductions as well as facility consolidations or closures that
could result in restructuring charges that would materially and adversely affect our results of operations. Because many of
our expenses are fixed in the short-term or are incurred in advance of anticipated sales, we may not be able to decrease our
expenses in a timely manner to offset any decrease in customer demand. If customer demand does not increase as anticipated,
our profitability could be adversely affected due to our higher expense levels.
Our past growth has placed, and any future long-term growth is expected to continue to place, a significant strain on
our management personnel, systems and resources. To implement our current business and product plans, we will need to
continue to expand, train, manage and motivate our workforce. All of these endeavors require substantial management
effort. If we are unable to effectively manage our expanding operations, we may be unable to scale our business quickly
enough to meet competitive challenges or exploit potential market opportunities, or conversely, we may scale our business
too quickly and the rate of increase in our costs and expenses may exceed the rate of increase in our revenue, either of which
would harm our results of operations.
Our revenue may fluctuate while a majority of our operating expenses are a factor of multi-year investments ahead
of when revenue is received, which makes our results difficult to predict and could cause our results to fall short of
expectations.
Our operating expenses are primarily related to multi-year research and development investments ahead of the revenue
received from the products which are produced. Our research and development expenses totaled $1.34 billion, $1.15 billion,
and $1.00 billion in fiscal years 2014, 2013 and 2012, respectively.
Any one or more of the risks discussed in this Annual Report on Form 10-K or other factors could prevent us from
achieving our expected future revenue or net income. Accordingly, we believe that period-to-period comparisons of our
results of operations should not be relied upon as an indication of future performance. Similarly, the results of any quarterly
or full fiscal year period are not necessarily indicative of results to be expected for a subsequent quarter or a full fiscal year.
As a result, it is possible that in some quarters our operating results could be below the expectations of securities analysts
or investors, which could cause the trading price of our common stock to decline. We believe that our quarterly and annual
results of operations may continue to be affected by a variety of factors that could harm our revenue, gross profit and results
of operations.
Because our gross margin for any period depends on a number of factors, our failure to forecast changes in any of
these factors could adversely affect our gross margin.
We are focused on improving our gross margin. Our gross margin for any period depends on a number of factors,
including:
• the mix of our products sold;
• average selling prices;