NVIDIA Reports Operating Results for Second Quarter Fiscal Year 2006

For First Six Months of Fiscal 2006, Company Achieves Record Revenue and Increases Net Income 426 Percent

SANTA CLARA, Calif., Aug. 11 /PRNewswire-FirstCall/ -- NVIDIA Corporation (NASDAQ: NVDA) today reported financial results for the second quarter of fiscal 2006 ended July 31, 2005.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020613/NVDALOGO )

For the second quarter of fiscal 2006, revenue was $574.8 million, compared to $456.1 million for the second quarter of fiscal 2005, an increase of 26 percent. Net income for the second quarter of fiscal 2006 was $74.8 million, or $0.41 per diluted share, compared to net income of $5.1 million, or $0.03 per diluted share, for the second quarter of fiscal 2005, a net income increase of 1,362 percent.

Revenue for the six months ended July 31, 2005 was a record $1.16 billion, compared to revenue of $928.0 million for the six months ended July 25, 2004. Net income for the six months ended July 31, 2005 was $139.3 million, or $0.77 per diluted share, compared to net income of $26.5 million, or $0.15 per diluted share, for the six months ended July 25, 2004, a net income increase of 426 percent.

"Our financial performance is a result of the successful execution and delivery of many market-leading products and platform-changing initiatives. Strong year-over-year revenue growth in our desktop GPU, MCP, and workstation product lines, combined with our intense focus on gross margin improvement led to our highest quarterly net income in three years," stated Jen-Hsun Huang, president and CEO at NVIDIA. "Our continued success underscores the importance of our key long-term growth strategies -- innovate and be the world GPU leader, expand and extend the reach of GPUs beyond the PC, and deliver total innovative market-defining platforms."

Second Quarter Fiscal 2006 and Recent Highlights:

-- Gross margin improved 710 basis points over the gross margin for the second quarter fiscal 2005.

-- The NVIDIA nForce(TM) product line revenue increased 128 percent year-over-year and has achieved record revenue for three consecutive quarters.

-- The NVIDIA Quadro(R) workstation product line revenue increased almost 40 percent year-over-year and achieved record revenue.

-- Introduced and simultaneously delivered two new GeForce (TM)7 graphics processing units (GPUs) -- the GeForce 7800 GTX and the GeForce 7800 GT -- designed for the enthusiast and performance desktop PC segments, respectively.

-- NVIDIA nForce4 SLI(TM) technology and dual GeForce 7800 GTX GPU are now featured in the new Dell XPS 600 desktop PC.

-- The NVIDIA GeForce 6600 GT GPU and the NVIDIA nForce4 SLI-based Asus A8N-SLI Deluxe motherboard earned the 2005 PC World "World Class" Award as best products of the year in hardware.

-- Introduced two new NVIDIA Quadro GPUs -- the NVIDIA Quadro FX 4500 and NVIDIA Quadro FX 3450 -- designed for the high-end and mainstream professional segments, respectively. Both GPUs support SLI technology.

-- NVIDIA extended share from 70 percent to 73 percent from the first calendar quarter of 2005 to the second calendar quarter of 2005 in the Performance DX9 Desktop GPU segment as reported in the Mercury Research Second Quarter PC Graphics Report 2005.

NVIDIA will conduct a conference call with analysts and investors to discuss its second quarter fiscal 2006 financial results and current financial prospects today at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time). To listen to the call, please dial 706-679-0543. A live Web cast (listen-only mode) of the conference call will be held at the NVIDIA investor relations Web site http://nvidia.com/ir and at http://www.streetevents.com . The Web cast will be recorded and available for replay until the Company's conference call to discuss its financial results for its third quarter fiscal 2006.


NVIDIA Corporation is a worldwide leader in graphics and digital media processors. The Company's products enhance the end-user experience on consumer and professional computing devices. NVIDIA graphics processing units (GPUs), media and communications processors (MCPs), and wireless media processors (WMPs) have broad market reach and are incorporated into a variety of platforms, including consumer and enterprise PCs, notebooks, workstations, PDAs, mobile phones, and video game consoles. NVIDIA is headquartered in Santa Clara, California and employs more than 2,100 people worldwide. For more information, visit the Company's Web site at www.nvidia.com.

Certain statements in this press release including, but not limited to, our long-term growth strategies and initiatives, including being the world GPU leader, expanding the reach of the GPU beyond the PC, and delivery of total solutions and innovative platforms are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Such risks and uncertainties include, but are not limited to, continued market acceptance of new products and technologies, prohibitive pricing of new products and technologies, manufacturing costs and delays, demand for use of GPUs in devices other than the PC, continued demand for improved GPUs, difficulties in the development of new and enhanced products, the impact of technological development and competition, our dependence on third-party manufacturers, general industry trends including cyclical trends in the semiconductor and PC industries, the impact of competitive products and pricing alternatives, slower than expected or unanticipated changes in industry standards and interfaces and other risks detailed from time to time in the reports NVIDIA files with the Securities and Exchange Commission including its Form 10-Q for its quarter ended May 1, 2005. These forward-looking statements speak only as of the date of this release. NVIDIA disclaims any obligation to update these forward-looking statements.

NOTE: All company and/or product names may be trade names, trademarks and/or registered trademarks of the respective owners with which they are associated. Features, pricing, availability, and specifications are subject to change without notice.

                              NVIDIA CORPORATION
                    (In thousands, except per share data)

                                     Three Months Ended    Six Months Ended
                                     July 31,  July 25,   July 31,   July 25,
                                       2005      2004       2005       2004

    Revenue                          $574,812  $456,061  $1,158,658  $927,966

    Cost of revenue                   357,278   315,968     730,971   639,037

    Gross profit                      217,534   140,093     427,687   288,929

    Operating expenses:
      Research  and  development                  85,814        85,420          171,727      163,170
            Sales,  general  and
              administrative                                    51,683        50,874            99,741        98,080

                    Total  operating  expenses        137,497      136,294          271,468      261,250

        Operating  income                                      80,037          3,799          156,219        27,679

        Interest  and  other  income,  net            5,219          2,600              9,592          5,407

        Income  before  income  tax  expense      85,256          6,399          165,811        33,086

        Income  tax  expense  (A)                          10,419          1,280            26,530          6,618

        Net  income                                                $74,837        $5,119        $139,281      $26,468

        Basic  net  income  per  share                    $0.44          $0.03              $0.83          $0.16

        Diluted  net  income  per  share                $0.41          $0.03              $0.77          $0.15

        Shares  used  in  basic  per  share
          computation                                            168,943      166,252          168,795      165,711

        Shares  used  in  diluted  per  share
          computation                                            180,790      177,419          180,612      177,999

        (A)  The  effective  income  tax  rate  for  the  three  and  six  months  ended
        July  31,  2005  was  12.2%,  and  16%,  respectively.    The  effective  income  tax
        rate  for  the  three  and  six  months  ended  July  25,  2004  was  20%.

                                                            NVIDIA  CORPORATION
                                        CONDENSED  CONSOLIDATED  BALANCE  SHEETS
                                                                (In  thousands)

                                                                                                    July  31,                January  30,
                                                                                                        2005                            2005

        Current  assets:
            Cash,  cash  equivalents  and
              marketable  securities                                            $717,546                    $670,045
            Accounts  receivable,  net                                          355,393                      296,279
            Inventories                                                                    300,955                      315,518
            Prepaid  and  other  current  assets                            24,756                        19,819
            Deferred  income  tax  asset                                            3,265                          3,265

                Total  current  assets                                          1,401,915                  1,304,926

        Property  and  equipment,  net                                        178,951                      178,955
        Deposits  and  other  assets                                              15,977                          9,034
        Goodwill                                                                              108,107                      108,107
        Intangible  assets,  net                                                    23,268                        27,514

                Total  assets                                                        $1,728,218                $1,628,536


        Current  liabilities:
            Accounts  payable                                                        $221,047                    $238,223
            Accrued  liabilities                                                    204,451                      182,077
            Current  portion  of  capital  lease
              obligations                                                                            --                              856

                Total  current  liabilities                                    425,498                      421,156

        Deferred  income  tax  liability                                      20,754                        20,754
        Long-term  liabilities                                                        6,733                          8,358

        Stockholders'  equity                                                  1,275,233                  1,178,268

                Total  liabilities  and
                  stockholders'  equity                                      $1,728,218                $1,628,536


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