Nvidia Q3 Results Dropped As Crypto Miners Demand Waned

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Total News – Atlanta, GA 11/16/2018. NVIDIA has announced its financial results for third quarter (Q3). The forecast sales for its fourth quarter is well below Wall Street expectations,

According Jensen Huang, founder and CEO of NVIDIA, "Our near-term results reflect excess channel inventory post the crypto-currency boom."

According to Reuters, NVIDIA's gaming video cards had risen with the cryptocurrency frenzy and the high prices have drove some buyers away. When the frenzy was over, the company expected the buyers to come back but the process was slower than expected.

In a conference call, Huang said:

"The crypto hangover lasted longer than we expected. We thought we had done a better job managing the cryptocurrency dynamics."

"Tariffs were 'not really a factor' and that the fallout from the cryptocurrency decline was the sole reason for the inventory build." Huang added.

The company has stopped shipping its mid-priced chips resulting to the expansion of their provision for inventories to $70 million. The same provision had expanded to more than tripled for the first nine months of the current year to $124 million. As a result, the company's gross margins has lowered by 1.8 percentage points in the quarter to 60.4. Margins were also held down by $57 million in charges related to the company's previous generations of chips following the plunge in cryptocurrency mining demand.

According to a report by CNBC, it has become less profitable to use graphics processing units (GPUs) for mining. Citing Ethereum as an example, the report stated that the hash rate fell drastically this year and that the value of Ethereum has dropped as well. 

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