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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (46196)	1/17/2012 12:06:42 AM
From: Jurgis Bekepuris	Respond to of 78705

NVDA. I agree with Paul Senior. The positive of NVDA is that it's the only game in town if you look for non-captive GPUs. So Intel or someone else might buy them. They are not very expensive for buyout at 8B, even assuming 1.3x multiple. The negative is that GPU-intensive computers are a niche. Almost everyone is trying to integrate GPU into CPUs or SoC solutions. Sure there are gaming/graphics-intensive PCs bought by enthusiasts. Yet, every year there are fewer and fewer PCs-with-name-brand-GPUs. Most of the market is crappy-but-workable Intel integrated graphics solutions or AMD-a-bit-less-crappy-integrated-Radeon solutions. Yes, NVDA got some of that business, but I'm pretty sure it's lower margin. And Intel contract can be considered negative - if Intel has a contract, they won't buy the company. I am not up to speed about Tegra competitive position, but IMHO NVDA will have very very tough competition in CPU area. Intel is 900 pound gorilla, while ARM-solutions is even bigger gorilla in non-x86 space. To get into this field and remain profitable there is very very hard. Almost all companies that tried it are now gone. IMHO, it's not surprising that NVDA does not have great long term financial results. They are trying to compete in a big-boy playground. It's not going to be easy.