The strokers of beards and naysayers on Wall Street are getting a bit worried about what is coming out of the halls of the Green Goblin King.
Lately there has been lots of mutterings about delayed products, a bad dice roll on the mobile market and the odd court case. All of this is sending Nvidia’s stock into free fall.
Stock prices have fallen 44 percent this year which, to put it in perspective, is worse than BP managed to do by creating the worst man-made disaster in history.
While Wall Street has been muttering against him, Nvidia CEO Jen-Hsun Huang has been a merry old soul. He says his graphics chips are on the rise and the “vast majority of the world” recognises Nvidia as a “world leader in visual computing.”
While talking up your product is good PR, in the face of falling shareprices, investors are going to be worried that Huang is more in denial than the temple of Isis at Philae.
This should have been a good year . Out of the court of the Green King stomped Fermi, which promised game designers more processing power. The only problem was that the $200 chip is six months late. If it had turned up on time then it might have made more of an impact. Now Nvidia has to hope that the chip was ahead of its time enough to save it.
But other problems troubled the court too. The relationship with Intel broke down in February. The chipmaker decided to give up on licensing the Green Goblins chipsets which effectively locked it out of the market.
Nvidia sued Intel for breach of contract in March 2009 and decided to pull out of the chipset business.
So this limited Nvidia’s future to the mobile phones and supercomputers market. All potentially good, but there is some tough competition.
Nvidia banked its farm on its Tegra chip being the new brain of smartphones. In doing so its main Opposition was the natty Snapdragon chip from Qualcomm’s and Texas Instruments OMAP.
While the rivals picked up the success stories of the smartphone business, Nvidia’s claim to fame was to nail its colours to Microsoft’s Zune and ‘Kin. The ‘kin was such a spectacular failure that it might have even spoiled Nvidia’s chance to sell to other manufacturers.
Word on the street is that Tegra will find its way into the more popular Android phones but Nvidia spent a fortune fine-tuning Tegra chips so they work with Windows. If Windows 7 Mobile takes off then it might make some of this back, but it seems that Nvidia missed making a fast buck off of Android adoption.
It has had more luck with getting its Tesla chip under the bonnet of supercomputers. The Nebulae, a supercomputer in China powered by Tesla, was ranked the second-fastest machine in the world.
But the problem is that the supercomputer world is largely dominated by IBM and HP. Nvidia will have its work cut out for it trying to get acceptance in what is a closed club.
Ironically the cards based on the Fermi chip are not that bad and are starting to get attention amongst the gaming community. Unfortunately, although Nvidia needs these guys, it is the sort of business it needed to move beyond if it was going to have any sizeable impact on the world.
Wall Street is going to be less impressed with high sales in the gaming community than it is to see Nvidia in the heart of a new generation of smart phones. What is dangerous for Nvidia, if the share prices keep falling like this, it is going to see its kingdom shrink to a niche provider of high performance game gear.