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Since its breakthrough in the gaming industry in 1999, NVIDIA has been a force to reckon with in the graphics and chip making industry. Over the years, it has maintained its status as one of the largest graphics and chip making company in the world.
But that didn’t shield NVIDIA from the ongoing crypto winter that started in 2018, and that cuts deeply through the sales of crypto mining equipment (and is similarly felt by other companies as well).
As with the norm in the industry, NVIDIA released its proposed financial guidance for the fourth quarter of the fiscal year 2019 before the current bear market in the crypto sphere. Stemming from how badly the fourth quarter of 2018 went, the company was compelled to review its ratings and release an updated financial guidance for the fourth quarter of the fiscal year 2019.
Prior to the scheduled earnings call, proposed to hold on Feb. 14th, the company released updated financial guidance informing its investors and the general public of their new expectations. The updated financial guidance estimates a total of 2.20 billion USD as the expected revenue for the fourth quarter of the fiscal year 2019. This is a slight decline from the previously estimated value which was placed at 2.70 billion USD.
As you already guessed, this slight decline is due in most part to the ongoing crypto meltdown in the crypto sphere; accordingly, that impacts dramatically NVIDIA’s sales of crypto mining equipment. To make things worse for the company, the gaming industry is performing less than its all time highs. According to the report released by NVIDIA, the gaming industry experienced a slight decline due to excess mid-range channel inventory that followed the crypto boom. The company is experiencing a decline in consumer demand for its GPUs, especially from China due to deteriorating macroeconomic conditions.
Shinning the light on their datacenter, the story isn’t so different. The company report that some of their deals didn’t close in the last month of the quarter and this had a tremendous pull on their revenue, causing it to fall some laps behind their expected earnings. This is due in most part to the shift by customers who tend to look elsewhere for a more cautious approach.
Speaking on the rather disappointing earnings, Jenseng Huang – the founder and CEO of NVIDIA – admitted that the fourth quarter of 2018 was an unusually turbulent period. Although disappointed by the result, Huang added that they are confident in their growth drivers and strategies; and as such, they are positive the future holds better results.