Michael Hara - Investor Relations Jen-Hsun Huang - President, Chief Executive Officer and Director David White - Chief Financial Officer Marvin D. Burkett - Senior Advisor

Daniel Berenbaum - Auriga Hans Mosesmann - Raymond James Glen Yeung - Citigroup Uche Orji - UBS Rajvindra Gill - Needham & Company Patrick Newton - Stifel Nicolaus Alex Gana - GMP Securities Jim Schneider - Goldman Sachs Craig Berger - Friedman, Billings, Ramsay Shawn Webster - J.P. Morgan David Wu - Global Crown Capital Suji DeSilva - Kaufman Brothers

Good afternoon, ladies and gentlemen. Thank you for holding. I would now like to turn the call over to Michael Hara, Vice President, Investor Relations. Thank you, sir. You may begin.

Thank you, Shannon. Good afternoon and welcome to NVIDIA's conference call for the first quarter of fiscal 2010 ended April 26, 2009. Today’s call is being recorded. If you have any objections, please disconnect at this time. On the call today for NVIDIA are Jen-Hsun Huang, NVIDIA's President and Chief Executive Officer; David White, NVIDIA's Chief Financial Officer; and Marv Burkett, Senior Advisor. Jen-Hsun is currently traveling on business in Europe and is conference in from there. Before we begin today’s call, I would like to remind you that you can find copies of our SEC filings, our earnings release, and a replay of this webcast on the investor relations page of our website at www.nvidia.com. The webcast will be available for replay until our conference call to discuss our financial results for the second quarter of fiscal 2010. Also, shareholders can listen to a live webcast of today’s call via the investor relations page of our website. During this call, we will discuss some non-GAAP financial measures about gross margin, operating expenses, free cash flow, tax rate, net income or loss and net income or loss per share. You can find a reconciliation of these non-GAAP financial measures to GAAP financial measures in our financial release, which is posted on our website. Unless otherwise noted, all references to research, market, and market share numbers throughout the call come from Mercury Research or John Petty Research. The content of today’s conference call is NVIDIA's property and cannot be reproduced or transcribed with our prior written consent. During the course of this conference call, we may make forward-looking statements based on current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, including statements of our financial outlook and projections, the importance, impact, and benefits of our products and technologies, our competitive position and market share, our cash conservation efforts, and our growth objectives, innovations, and strategies. Our actual results may differ materially from results discussed in any forward-looking statements. For a complete discussion of factors that could affect our future financial results and business, please refer to our Form 10-K for the fiscal year ended January 25, 2009, and the reports on Form 8-K filed with the Securities and Exchange Commission. All forward-looking statements are made as of the date hereof based on information available to us today and except as required by law, we assume no obligation to update any such statements. The content of the webcast contains time sensitive information and is accurate only as of May 7, 2009. Consistent with the requirements under Regulation FD, we will be providing our outlook for the second quarter directly in the conference call and will be unable to provide significantly more information in offline conversations or during the quarter. Therefore, questions around our financial expectations should be asked during this call. At the end of our prepared remarks, there will be time for your questions. In order to allow more people to ask questions, please limit yourself to one question. After our response, we will allow one follow-up question. With that, let me turn the call over to Jen-Hsun. Jen-Hsun Huang: Thanks, Mike. Good afternoon, everyone and thank you for joining us today. Today we reported revenue of $664.2 million, and a GAAP net loss of $0.37. This included a one-time tender offer to purchase employee stock options that were significantly under water. On a non-GAAP basis, we had a net loss of $0.09 per share. Revenues grew 38% over the previous quarter as we gain market share in both channel sell-out and OEM inventory replenishment increased. During the quarter, we made good progress managing operating expenses and reducing inventory. We have ongoing initiatives to reduce operating expenses further while continuing to invest in our strategic initiatives, which are: one, maintaining our GPU leadership; two, driving the GPU computing revolution; three, increasing the adoption of GPUs in all segments of computing; and four, leading the mobile computing revolution. Our discrete desktop GPU share increased again this quarter. In the discrete desktop GPU segment, we gained 6% to 69%. Our notebook and desktop GPU share are about the same and the desktop GPU has exceeded our previous record levels achieved during Q1 of 2008. In addition to graphics leadership, our strategy is to lead the industry to the next level with physics processing. With our physics engine and library, which is available for PC, PS3, Xbox 360, Wii, and the iPhone, game developers can create amazing environments using physics simulations that are dynamic, realistic, and interactive with the player. PhsyX has been adopted by EA, THQ, 2K Games, and most recently, Sega. We have built up a rich pipeline of exciting games with PhsyX support. Mirror’s Edge and Sacred 2 have shipped and received rave reviews, and we anticipate the release of Terminator Salvation, Dark Void, Darkest of Days, You Wars, and Cryostasis -- each of these titles, when run over the 100 million NVIDIA CUDA GPUs in the market will experience a dramatic speed-up. Physics processing is extremely taxing even for the highest-end CPUs. By offloading the processing to CUDA, the parallel computing mode of our GPUs, we can speed up physics processing by an astonishing five to 20 times. And it’s clear now that physics processing is becoming a must-have technology, just as programmable shading has been the last five years. Utilizing the GPU for parallel computing is one of our most important strategic initiatives. We invented CUDA to harness the massive computational resources in a GPU that is otherwise used only for 3D graphics. The adoption of CUDA is global and GPU computing has reached the tipping point. GPU computing will be incorporated into the two most important operating systems in the very near future -- Windows 7 with DX compute, and OS 10 Snow Leopard with Open CL will incorporate GPU computing into the core operating system and the GPU will become indispensable to achieve a great computing experience. This quarter we released our first Open CL drivers to developers who participated in our open CL early access program and demonstrated DirectX compute on Windows 7 at the Game Developers Conference. There’s a growing lists of consumer applications that are accelerated by CUDA. I spoke about physics processing that will be in nearly every game. This quarter, motion DSP [D-Reveal], ArtSoft’s SIM HD, Cyberlink’s Espresso, Nero Move It, and Super [Loylascope] announced support for CUDA. CUDA has opened up the high performance computing market to our GPUs. We server this multi-billion dollar new growth market with a product line called TESLA. This is a greenfield market for us and our three-year effort has given us a significant lead to the competition. We have traction in virtually every major high performance computing category from finance to oil and gas to medical imaging, to super computing centers. We have significant projects throughout the U.S., Asia, Canada, Brazil, Australia, Europe, Eastern Europe, and India. Success stories are surfacing from all over the world. This quarter in China, Geostar is performing the search for oil and gas using TESLA. Working with the Institute of Geology and Geophysics as the Chinese Academy of Sciences, Geostar has demonstrated its solution of running 600 times faster than what was previously possible with a CPU-based cluster. French banking giant BNP Paribas Corporate and investment banking division recently replaced 500 CPU cores with just eight TESLA GPUs. They sped up response times by 15X while consuming less than one-tenth the power. BNP Paribas effectively reduced the energy consumption of performing the same calculation by nearly 200 times. Increasing computation throughput while reducing cost and energy consumption has become a mission critical imperative for nearly every company. We announced this week the TESLA GPU pre-configured cluster, which increases the accessibility of super-computing clusters to the millions of engineers, scientists and researchers around the world. The TESLA pre-configured cluster is a ready-to-install super-computer that is available from a network of certified TESLA vars including [Cray], Penguin, [Apro], [Colfax], James River, and many others around the world. We believe a GPU can dramatically enhance the performance of a PC of any budget. We created ION to bring the benefits of the GPU to the smallest and most affordable PCs. The recently announced Acer Aspire Revo is a full Vista Premium PC available at the price of a basic entry level machine, yet it provides everything the mainstream consumer wants from a PC, including very high quality Blu-Ray playback and modern DX10 games. Because of the ultra-high integration and lower power of ION, Acer was able to create a small, quiet, provocative industrial design that is light enough to hang on the back of your display. Last week, the first 5,000 Revos delivered to Germany e-tail sold out in one day. The Aspire Revo has been winning rave reviews. Digital Trends predicted that it should be one of the most successful desktop products released this year. ION has forever changed what consumers can expect from the mainstream PC. Even affordable and small PCs can be wonderful and deliver the full PC experience. More ION based platforms will be available from virtually every major PC OEM. You can expect to hear a great deal in the months ahead about the many ION design wins. At the World Mobile Conference in February, we revealed our Tegra Netbook. At less than one watt of power, Tegra can surf the web and present the full high resolution experience to the Internet. With Tegra, we are enabling a new class of web-based computers that is high resolution like a PC, yet always on like a smartphone. We now have Tegra design wins that range from portable media players, smartphones, netbooks and other new classes of mobile Internet devices. Research from iSupply projects shipments of Internet enabled devices ranging from ultra-mobile PCs to portable media players to increase nine-fold in the next four years. More than 400 million of these devices will be shipped in 2012, an annual compound growth rate of better than 50%. We look forward to announcing exciting Tegra devices in the coming months. Our nearly four-year investment in Tegra has positioned us squarely at the center of the next computing revolution. We estimate that Tegra has opened up an additional $10 billion growth market for us. Now let me introduce David White, who succeeded Marv Burkett earlier this year as CFO. David brings 25 years of experience to the role, most recently as CFO of [Samnia SCI]. He is already making a big impact here. I want to take this opportunity to thank Marv for his enormous contributions to NVIDIA over the past six years. Marv leaves a legacy that he can be very proud of. He is continuing in an advisory role, working with David and me to facilitate a smooth transition and taking on projects that can benefit from his expertise. With that, let me turn the call over to David.

Thanks, Jen-Hsun. My comments today will focus on a review of our first quarter results of operations, both on a GAAP and a non-GAAP basis, along with a discussion of selected balance sheet accounts and cash flows. I will then conclude with comments regarding our outlook for the second quarter of fiscal year 2010. As Jen-Hsun indicated in his opening comments, revenue for the first quarter of fiscal 2010 was $664 million, which was up 38% from $481 million in the prior quarter, and significantly higher than our estimate, which was flat to slightly up. We reported a GAAP net loss of approximately $201 million, or $0.37 per share. Our GAAP net loss included a one-time charge of $140 million associated with a cash tender offer we previously announced to purchase certain employee stock options. This compares to a GAAP net loss of $0.27 per share in the prior quarter. Excluding the stock option tender offer, as well as other stock-based compensation, we reported a non-GAAP net loss for the quarter of $47 million, or a net loss of $0.09 per share. This compares with an $0.18 non-GAAP net loss per share in the prior quarter. Let me now turn to our individual businesses -- our GPU business, which includes desktop, notebook, and memory -- represented 53% of our total revenue and recorded a 44% revenue increase quarter over quarter. Much of this increase was driven by the strength of the desktop segment, which was up almost 50% quarter over quarter. You will recall that last quarter’s revenue in this segment was negatively impacted by low sell-in to the channel as our channel partners worked to aggressively deplete excess inventories. Channel inventories now appear to have stabilized at slightly over one month’s supply, with our Q1 sales into the channel roughly approximately channel sales out. As such, our desktop revenue figures in Q1 more closely approximately true end-market demand than what we had experienced in Q4. The notebook segment of our GPU business was up 28% quarter over quarter, driven primarily by increased OEM demand, which comprised the vast majority of this segment. Here also, fourth quarter revenues were abnormally impacted by OEM inventory corrections that have now abated. Our MCP business, which represented 28% of our total revenue during the quarter, was up approximately 94% quarter over quarter. Demand was primarily driven by our chipset products designed for the mainstream AMD integrated desktop segment, as well as our chipset products designed for the Intel-based notebook segment. Revenue for our PSB business, which includes workstation graphics and computing, was essentially flat quarter over quarter and represented 16% of total revenue. Our share in this segment remains stable -- corporate demand, which comprises a substantial percentage of this business, has not shown any signs of economic recovery at this point. This reflects constrained budgets and consumer redeployment and upgrade activity of older equipment. Looking at the business as a whole, GAAP gross margin for the first quarter was 28.6%. Excluding charges associated with a stock option tender offer, as well as other stock-based compensation, non-GAAP gross margin was 30.6%. Our non-GAAP gross margin, which fell short of expectations and estimates, was impacted by several items. First, while revenue in our PSB business was flat quarter over quarter, as a percentage of total company revenue, it accounted for less of the total. Because our PSB business is generally more profitable than the rest of our business, this had an overall negative impact of approximately four points on gross margin. Second, gross margin was also negatively impacted by the sell-off of some of our older 65-nanometer product, the effect of which was only partially offset by various reserve true-ups. GAAP operating expenses for the first quarter were $421 million. Non-GAAP operating expenses, which again excluded charges associate with the stock option tender offer, as well as other stock-based compensation, amounted to $260 million, essentially flat quarter over quarter and consistent with our estimate. Payroll related expenses were up quarter over quarter, due to the holiday shut-down in the fourth quarter, and additional FICA based payroll taxes we accrued in the first quarter. However, this increase was largely offset by cost reduction efforts that we realized elsewhere. Our GAAP tax rate for the first quarter was a benefit of 10.4% and our non-GAAP tax rate was a benefit of 7.5%. NVIDIA's worldwide employment at the end of the quarter stood at 5,480, up 60 from the fourth quarter. We essentially have a hiring freeze in the U.S., with only the most critical positions being filled. Turning to the balance sheet, accounts receivable at the end of the quarter were $304 million, which equated to a DSO of approximately 42 days, an improvement of approximately 18 days from the prior quarter. Inventories at the end of the quarter were $327 million, down $211 million, or 39% quarter over quarter. Inventory days at quarter end were 64. This compares with 145 days at the end of the prior quarter. These reductions resulted from rescheduling actions we took in response to our high inventory carryover from Q4, as well as early implementation of the staging of inventories at a pre-finished state just prior to custom configuration. We believe this latter change is important to us because it will enable us to better respond to changing market demand while at the same time maintaining overall inventory levels. Depreciation and amortization expense for the first quarter amounted to approximately $51 million, slightly up from $48 million in the fourth quarter. Capital expenditures for the quarter amounted to $21 million, which as a result of our cost reduction efforts, was significantly down from the $43 million we spent in the prior quarter. Accounts payable at the end of the quarter were $226 million, up approximately $7 million from the prior quarter, and our free cash flow for the first quarter was a positive $121 million. Cash and cash equivalents, marketable securities at the end of the quarter were approximately $1.34 billion, up approximately $83 million quarter over quarter. This figure is significant considering we paid out approximately $82 million associated with the stock option tender offer we completed in March. In closing, let me briefly comment on our outlook for the second quarter of fiscal 2010. While it was particularly difficult during these economic times to place a high degree of certainly in market demand and the pricing environment we compete in, our outlook for the second quarter is as follows: we expect revenue to be up quarter over quarter in the range of 5%. As for gross margin, while we are not expecting any near-term improvement in demand in the workstation market, we do believe cost reduction efforts will allow us to improve margins. Accordingly, we expect our GAAP margins to be in the range of 32% to 34%. We expect GAAP operating expenses to be in the range of $280 million. : This concludes my remarks. I thank you for your time and with that, I would like to open the call up for questions. Operator, can we take questions at this point.

(Operator Instructions) Our first question comes from the line of Daniel Berenbaum with Auriga. Please go ahead. Daniel Berenbaum - Auriga: Good afternoon, guys. Can we talk a little bit more about the inventory -- can you talk -- can you give us a little more detail about were there any inventory write-downs and did you sell through any -- or you mentioned you sold through some previously reserved inventory. Can you quantify a little better what the write-offs were or how much of the reserves that there were that you sold through with essentially zero cost, and how much still had some cost associated with it?

We have actually a couple of situations -- we have inventory that we completely wrote off in a prior period. We also have inventories that we wrote down to market value. Some of those inventories in both categories were sold during the quarter, some of which we had gains on, some of which we had losses on. It turns out that the losses we experienced on the sale of that inventory plus some of the other products actually offset that by a greater amount, and so on a net basis, it was actually a negative impact to the quarter. Daniel Berenbaum - Auriga: And was that basically because you, of the amount that you had written down, you hadn’t written it down enough?

That’s correct. Daniel Berenbaum - Auriga: So is that --

In some cases. Daniel Berenbaum - Auriga: In some cases -- did that then trigger any other accounting accruals on the balance sheet and is that part of what explains the inventory, the big inventory drop as well?

There was also a modest amount of new lower cost [to market] accruals as well. On a net basis, it was negative, as I indicated. Daniel Berenbaum - Auriga: Okay. Thanks, that makes sense. And then, when you talk about the gross margin improvement going into the next quarter, how much of -- number one, do you expect any additional inventory write-downs or do you expect to sell through any inventory that has previously been reserved for? And then can you help quantify a little bit further what that improvement is coming from? Is it just mix shift back to PSB or is it mix shift within GPU as well, perhaps some of the newer products, like the 40-nanometer products?

In the outlook for the second quarter, we’ll repeat much I think of the same scenario we had in the first quarter. We will continue to sell off some inventory that we have written off and we will continue to sell some inventory that we have written down to lower cost of market. Right now, I would anticipate that the net effect of those two would be roughly a wash. Daniel Berenbaum - Auriga: Okay, and then what kind of improvement to gross margin do you expect from the mix shift to not just the professional solutions business but also from the newer products? The newer GPU products, I mean?

David, obviously we are ramping 40-nanometer very aggressively but we haven’t announced any new products yet, and so it’s not appropriate to talk about new products right now. In terms of next quarter’s gross margins, obviously we have consumed a lot more of our 65-nanometer inventory this quarter and I think that the amount of our 65-nanometer inventory at this point is quite negligible. And so that is going to help our gross margins going forward. Those are the biggest levers and we are looking forward to having the PSB business coming back online as the enterprise starts to buy again. We have really exciting new products for Quadro that we’ve launched and that the OEMs have already geared up, and so as soon as the end market comes back to life, I think that the workstation business is going to do really well for us once again. Daniel Berenbaum - Auriga: Okay, great. Thanks very much.

Our next question comes from the line of Hans Mosesmann with Raymond James. Hans Mosesmann - Raymond James: Thanks. Jen-Hsun, on the 40-nanometer, since you brought it up, I know you are not going to talk about new products that are not announced but can you give us an update on how the ramp is going relative to previous process nodes in terms of the ramp, the volumes, and can you give us an update on what percentage of the mix by the end of the year could be coming through that process node? Thanks. Jen-Hsun Huang: Let’s see -- the ramp is going fine. It’s during the -- you know, we are ramping 40-nanometer probably harder than anybody and so we have three products in line now in 40-nanometer and more going shortly. So there’s -- this is a very important node. TSMC is working very hard. We have a vast majority of their line cranking right now with new products, and so we are monitoring yields and they are improving nicely week-to-week-to-week, and so at this point, there’s really not much to report. In terms of the mix towards the end of the year, let’s see -- I haven’t -- my rough math would suggest about 25%, is my guess. I mean, there’s still going to be a lot of 55-nanometer products. A lot of our MCP products, ION, for example, is still based on 55-nanometer and ION is going to be running pretty hard. I think you heard in David’s comments earlier that our Intel chipset product line is our fastest growing business and so my sense is that that’s going to continue to be successful and that is still in 55-nanometer. So I would say roughly 25% to 30% is my rough estimate going into the end of the year. Hans Mosesmann - Raymond James: Thank you.

Our next question comes from the line of Glen Yeung with Citigroup. Glen Yeung - Citigroup: Could you just clarify again your OpEx guidance for the July quarter? Because I think I heard that it’s going to be up Q-on-Q, and I just wanted to make sure I heard that right.

It’s not up. It’s about $280 million on a GAAP basis. Glen Yeung - Citigroup: On a GAAP basis -- and what would it be on a pro forma basis?

The guidance we are giving for SBC for next quarter is around $25 million. Glen Yeung - Citigroup: Okay, and then can you give us a sense, David -- when you look into the end of the fiscal year, for example, what are your thoughts about the kind of run-rate of operating expenses you expect to be on at that point, or really what I am asking, you make the point in the comments that you’ve got OpEx programs in place. I just want to get a sense of maybe what those are and what the targets are for that program.

So I think in the first quarter conference call, we talked about a stretched goal for the company of about $265 million, and we are still working aggressively to achieve that objective. We have a lot of programs, as Jen-Hsun talked about in his comments, that we absolutely want to maintain our investments in and we feel strongly about the return we will ultimately achieve from those investments. And so our cost reduction activities are trying to balance maintaining all of the resources we can on those investments and still trying to spend our money as wisely as we possibly can, and so we are focusing on a lot of ways in terms of how we manage our expenses and where our expenses are actually incurred, and trying to influence them in ways that won’t affect those programs. So I think the $265 million target is still intact and we are -- I assume we will achieve that sometime in the next -- certainly before the end of the calendar year and our fiscal year. Glen Yeung - Citigroup: Okay, and one last one maybe for Jen-Hsun -- maybe talk about the pricing environment that you are seeing out there. Obviously we are in a unique demand environment here and any sense that you are seeing anything unique on pricing as a result? Jen-Hsun Huang: Pricing is -- I would characterize as aggressive, but we are at a point now with the pricing where we think that we are going to be relatively stable for some time. And our products gain a premium in the marketplace relative to the competition, because of the reputation of our products and the performance of our product and increasingly the work that we do around physics and CUDA is being recognized as important, and I commented earlier the number of games that are coming out with PhsyX in the game are -- it’s coming out in a really rich pipeline now and we are seeing game titles coming out on a regular basis now with PhsyX included. And when you compare a game with PhsyX in it running on CUDA to one that is running on the CPU, the difference is so substantial that our GPU is just superior on so many different fronts. And so I think that we are going to leave our positioning in the marketplace with a premium to our products because it is a superior product and I think the market is recognizing that. Glen Yeung - Citigroup: Thanks.

Our next question comes from the line of Uche Orji with UBS. Uche Orji - UBS: Thank you very much. David or Jen-Hsun, anyone can answer -- can I please ask you about how the quarter progressed? Because if I look at the DSOs, it seems to have dropped off quite sharply, so can you just give me a sense of how, month-by-month, the quarter progressed in terms of demand? Because looking at this one made me conclude that it looks like demand tailed off towards the end of the quarter. Is that the right conclusion? Jen-Hsun Huang: Actually, it didn’t. The quarter was a pretty solid quarter, I would say. In fact, we had spot shortages of several products and there were rumors of us pushing our supply chain really hard to get products out into the marketplace, and all of that is true. And we came into the quarter looking pretty good, so I think our -- the market is still uncertain and we monitor sell-out in every single geography for every single product like crazy these days, and so we’ll continue to watch it but so far, so good. Uche Orji - UBS: Okay. Just going back to -- David, going back to the margins, I think in the very first question, you were explaining that the impact of the inventory products that were sold, that the reserve was negative. So what is the cleanest gross margin? So if I walk off 30.6, and if I had to make adjustments for this inventory that were reserved and sold that had a negative impact -- I am trying to get a sense of what then is a clean gross margin for the quarter that just ended.

Well, I guess it depends on what your definition of clean is, I guess. Probably the single largest item that impacted margins in the quarter really is the fact that our workstation business, our PSB business, as we call it, was a smaller mix, percentage of the total mix. And as I indicated in my comments, that was about a four point hit on margins. And it overwhelms, actually, the other factors. It is the single largest item and as we gave our guidance, we are not anticipating at this point that is going to change any time soon, so if you wanted to find a clean quarter as our workstation business being back at the historical levels it’s been, you could add four points to margin. I think the other items that I indicated are a much smaller consequence. Uche Orji - UBS: Sure. And just the last question on the workstation business, obviously watching the end markets [inaudible], it looks like things sure looked pretty challenged for some time. Let me ask you about competition in this market -- I mean, we’ve seen some of AMD’s products getting designed into some HP workstations. Are you starting to notice any signs of improved competition? Are these products getting any traction that may affect your longer term market share in this area? That’s my last question. Jen-Hsun Huang: We are frankly not seeing competitive pressure in our workstation business. I think the competition has repeatedly claimed design wins in the workstation business for years now and this is just not a -- it’s not a chip business. This is a chip and a system solution, system software. It’s a complicated business and you are building products that needs to not only be great at Windows but Linux and just about every ancient operating system on the planet. And so it’s a very, very complicated business and the reason why our market share is so high has a lot to do with the investment that we put into it, and so this is -- this is a business that is about solving some of the most challenging problems in computing in the world and we are really, really good at it, and so I think we read about press releases from the competition from time to time and we take it all seriously but the fact of the matter is, it just takes a lot more investment than that to be successful. Uche Orji - UBS: Thank you.

Our next question comes from the line of Rajvindra Gill with Needham & Company. Rajvindra Gill - Needham & Company: Thank you. A quick question on the ION revenue contribution -- you guys had a huge revenue upside in the first quarter. A lot of that was due to improving sellout demand. How much was that related to the ION business and a related question, what were the gross margins on the ION business and what were the pricing ASPs on the ION? Jen-Hsun Huang: So let’s see -- hey, David, what was our Intel chipset business this quarter? Do you have the numbers over there? Total Intel chipset business? We basically only have one Intel-based chipset that we are shipping in any meaningful amount, so --

I don’t have it broken out, Jen-Hsun, between the two here with me. Jen-Hsun Huang: What was the total -- was it about $200 million, $180 million or so?

$180 million is the total. Jen-Hsun Huang: Okay, and so I would expect about -- out of that $180 million, about two-thirds of it, maybe a little bit less than that comes from the ION chipset and the way to think about that is in Q2 of last year, one year ago, that amount was approximately zero and so that gives you a sense for the adoption of our products in that segment. Rajvindra Gill - Needham & Company: Right, but are you including the 9400M that you are showing to Apple as the -- as ION or is this actually two-thirds of that $180 million design wins with other companies outside of Apple that are using ION? Jen-Hsun Huang: We don’t distinguish the two -- I mean, it’s the same processor from our perspective. The -- we call it the platform ION and increasingly people are calling the chip ION, and so we don’t distinguish the two, whatever people want to call it. I mean, when people buy the chipset from us, they call it ION. When the put it into the box and they brand it from the outside, because GeForce is such a terrific brand and contributes so much to the brand value of the end product, people call it GeForce. Do you see what I’m saying? So people buy the ION but they sell it as a GeForce. Rajvindra Gill - Needham & Company: Yeah, I’m just trying to get a better understanding of what additional design wins with other PC manufacturers outside of Apple are you getting with ION? I am trying to get an understanding of again the traction of ION outside of just the Apple business that was announced a few quarters back. Jen-Hsun Huang: If you estimate that Apple represents a little bit north of 50% of that, then I think it’s relatively correct. So the traction is good, and if you think about who the fastest growing PC companies are in the world, I think that’s Apple and Acer and [Asus Tech] and -- you know, they are all huge ION customers. Rajvindra Gill - Needham & Company: And any sense of what the gross margins or ASPs on that platform were in this quarter? Jen-Hsun Huang: About or better than corporate average. Rajvindra Gill - Needham & Company: The corporate average of this quarter of 30.6% or just what you have done historically? Jen-Hsun Huang: Better than this quarter. Rajvindra Gill - Needham & Company: All right. And then, can you give us any update in terms of the GT300 architecture, or the next generation architecture? Is that on schedule for the second half of ’09 or do you foresee any potential roadblocks with that rollout? Jen-Hsun Huang: We don’t comment about future products. Our current products are doing very, very nicely in the marketplace. What’s the point of talking about future products? Rajvindra Gill - Needham & Company: Okay, and just on the -- going on in terms of the revenue guidance of up 5%, how should we be looking at it in terms of individual business units? Should we be looking at kind of normal seasonality across the difference categories? And then should we be looking at the workstation business getting back up to like say 20% of total revenue, which has historically been in that range?

I would -- if I was modeling it out, I would assume workstation is flat and apply the 5% ratably to the other businesses. Rajvindra Gill - Needham & Company: So even with the flat workstation business, which carries a higher gross margin, you are still expecting 32%, 34% of GAAP gross margin?

Yes. Rajvindra Gill - Needham & Company: Okay. What is it on a non-GAAP basis? Are you able to break that out?

It’s not much different. SBC is like 20 bps, 0.2 -- small difference. Rajvindra Gill - Needham & Company: Okay. I appreciate it. Thank you.

Our next question comes from the line of Cody Acree with Stifel Nicolaus. Patrick Newton - Stifel Nicolaus: Thank you. This is Patrick Newton in for Cody Acree. This question goes to Dave -- I guess if you could speak a little bit -- if we started looking out at long-term gross margin, what does it take to get us back into the 40% range? And I guess is this something that you guys think is achievable in the fiscal ’11 timeframe?

I guess I would throw in a couple of things here. One is -- Jen-Hsun, you can jump in here, obviously -- our business and margins are heavily influenced by our high-end performance products and clearly as we move forward and TESLA and TEGRA and some of these other products that we have been talking about and continue to invest in become a part of our revenue mix and so forth, we believe that within that time period, we can be getting our margins back up into that kind of arena. Jen-Hsun Huang: If you look at our history, there was a time when we were -- we had rather low gross margins, and I think it was as low as 28 points, or something like that. And we, over the course of about a year-and-a-half, methodically worked our gross margins back up and exceeded our record levels. I have every confidence that the operational initiatives that we have in place today that looked at the reasons why our gross margins are challenged right now and the new mix of products that we are bringing to the marketplace and our -- you know, my full confidence that the industries will be revived and I will need to buy tools for their engineers, who are the hearts and souls of all industries, you know, will return. And when that happens, our gross margins have every opportunity to return to its record levels and potentially beyond. And so those are things that we are putting in place and the teams are executing fabulously across the board. If you watched us the last time, relentlessly march up our gross margins, we intend to do exactly the same this time. Patrick Newton - Stifel Nicolaus: Thank you. And then moving on, so talking about some of these new products that you guys just touched on, TESLA and TEGRA, could you talk about what kind of revenue you saw from TESLA in this quarter, and maybe some kind of expectation throughout the remainder of the fiscal year? And then also in regard to TEGRA, if you could talk about some -- if there’s been any recent change in design win momentum and any expectations you have for TEGRA in the back half of the year ramping perhaps a target run-rate exiting the fiscal year? Jen-Hsun Huang: TESLA was many millions of dollars and next quarter will be more, is my expectation. The traction that we are getting designing them into clusters all over the world, as I mentioned in my comments, are really doing terrifically and the national labs around the world are all benefiting from stimulus packages as the various governments invest in energy exploration and investing in education, and so I think those are all -- and TESLA is just in a fine spot at the right time. And so my expectation is that TESLA is going to continue do to well and we will grow it into a rather nice business. Hopefully within the next couple of years into a business like Quadro and potentially larger. TEGRA has -- we introduced a new category for TEGRA at the World Mobile Conference, and this is a TEGRA Netbook. Prior to that, we only had TEGRA smartphones and TEGRA portable media player design wins. Those products are just reaching the final production ready for final design phase and starting to ramp in production, and so we are -- I am expecting revenues this quarter and growing throughout the rest of the year. But this last quarter, we introduced a TEGRA netbook reference platform and we have many ODMs and OEMs working with us to bring TEGRA Netbook to the marketplace. You know, the telcos have discovered that when they can give away a computer with a subscription and that computer is a couple hundred dollars, they can really drive subscription rates, and so we are pretty excited about this and the telcos are pretty excited about it as well, with 3G data modems becoming so affordable, this is really a terrific way for them to increase their revenues. And the ARPU for a netbook that is high resolution and readily accessible so that you can stream high definition video or use Facebook wherever you are, the telcos are pretty enthusiastic about the type of ARPUs they will generate from these type of devices. So I think this is going to be a new growth category for us and we are working really hard to get it to production. Patrick Newton - Stifel Nicolaus: And Jen-Hsun, when we think about TEGRA ASPs, is it right to think of smartphones and then later on, maybe another $10 for mids and then some incremental, maybe $10 for netbooks on top of that? Jen-Hsun Huang: Let’s see -- help me understand your algorithm again. Patrick Newton - Stifel Nicolaus: Sorry -- if I think of ASPs for smartphones maybe being in the $10, $15 range, mids being $10 more than that in the $25 type of range, and then netbooks a little bit more -- is that the right way to think of the ASPs for TEGRA? Jen-Hsun Huang: I would think of the PNPs to be very similar to smartphones. I think the mids are higher than that. I think your $10 is about right. And then I think netbooks on the high end of mids, so I agree with that. Patrick Newton - Stifel Nicolaus: Perfect. Thank you very much.

Our next question comes from the line of Alex Gana with GMP Securities. Alex Gana - GMP Securities: Thank you very much. I am wondering about on the TESLA platforms how you get through or how you are working with potential customers to get some of the software that may be running on legacy hardware or standard hardware over to be TESLA compatible or adoptable in your systems? Jen-Hsun Huang: The vast majority of the serious computing clusters in the world run proprietary software. Oil and gas -- proprietary; finance, proprietary, and so there is a large internal development teams that protect these algorithms of theirs like we protect our algorithms and so we work with each one of their engineering teams or development teams to port to TESLA and the porting process is just all over the world and you could go -- and many of them when they do a port are so delighted by the results, they publish a paper. And if you go to Google and google CUDA GPU or NVIDIA CUDA GeForce GPU, you are going to find just reams and reams of paper that show the speed-ups that we talk about. You can also come to CUDA Zone -- do a search on CUDA Zone and you will see a whole bunch of applications that have been ported and the results that they are seeing. So that’s one method. We also work with software developers that target the verticals, and so they could be a small consulting firm for computational finance. They could be a small consult or large consulting firm for oil and gas discovery, so we work with them to develop software. And we will also port the major software packages like [Met Lab] and so there’s a piece of software that has been developed for [Met Lab] that accelerates [Met Lab] some 15, 20 times, and there’s some being developed again further to accelerating them further to that. And so we just -- we approached these applications based on what we think has the greatest potential to serve the market and also the greatest potential for speed-up. And so we just -- we work on all of them at the same time with a rather large dev tech team, a developer relations team, and we are working with the software developers all over the world. And so you just have to work on this one at a time. Now, the exciting thing about all of this is many of them were re-factoring and re-developing their software to run on multi-core CPUs and because they were so unsuccessful and frustrated by multi-core CPUs, TESLA showed up at exactly the right time, or CUDA showed up at exactly the right time. And so this is a -- this is really a perfect alignment of an industry that’s run out of choices but still needs to see significant speed.

Our next question comes from the line of Jim Schneider with Goldman Sachs. Jim Schneider - Goldman Sachs: Thanks. Good afternoon. I was wondering if you could start out on the notebook market a little bit and give us a sense of what you are seeing in that market with respect to mix of discrete and integrated GPUs, and whether you see that -- any shifts that would be permanent there? Jen-Hsun Huang: Well, in the notebook market, the discrete versus integrated has been relatively stable, I think. Probably about 25% of the notebooks are discrete. It might have been a little lower this quarter -- well, it probably is lower this quarter because of the significant growth of netbooks. And so if you excluded the netbooks, my sense is that discreet has probably gained relatively to integrated graphics. But let’s just assume that it’s relatively flat and going forward, the interesting dynamic is -- and we are anxious to see this play out but we are starting to hear from all over the world that integrated graphics don’t have DX Computer. DX Computer is the single most important new API from Windows 7 and it helps you do amazing things. If you have made a home movie and you put it on your PC and you wanted edit -- you know, add video editing and add some special effects to it and stitch a few photos and videos together, and you want to render it back to a DVD so you can send it to grandparents -- you know, that process without GPU computing is horrific. I mean, to make a one-hour movie, it will probably take you 10 hours to record it. And so with DX Compute, that one hour has become one hour and one hour, and so it’s just a revolutionary speed-up when it comes down to certain types of application that are very parallel and very data intensive, very computer intensive. And so I think without DX Compute on integrated graphics chips, the question is how will these PCs compete? And so we are seeing a lot more interest in people who need to put GPUs in their notebooks and desktop computers when Windows 7 comes around. Jim Schneider - Goldman Sachs: Thanks, and maybe just as a follow-up, could you give us an update on the magnitude of revenues you expect from TESLA in the current fiscal year, please? Jen-Hsun Huang: You know, it’s really hard to say exactly but if we did less than $50 million, I would be disappointed and I would be delighted if we are on a run-rate of north of $100 million going out of the year. Jim Schneider - Goldman Sachs: Great. Thanks very much.

Our next question comes from the line of Craig Berger with Friedman, Billings, Ramsay. Craig Berger - Friedman, Billings, Ramsay: This is Robert for Craig. Thanks for taking my question -- can you give us a better idea of what ASPs did in the quarter for desktops and notebooks for your chips? Thank you. Jen-Hsun Huang: David, you probably have that over there.

Probably most of our compression on ASPs probably came in the GPU line of our business in some select particular models and so forth. It was a little bit higher this last quarter than what we have traditionally seen on some particular programs on a quarter over quarter basis, that is. Jen-Hsun Huang: If you look at ASPs quarter to quarter, it surely should have increased because we gained share in most of our -- well, almost all of our share gains came from the high end. So we gained about 6% share over quarter over quarter, and so that should -- all of that is high-end share, so our ASP should have gone up. Craig Berger - Friedman, Billings, Ramsay: And then going forward, do you expect your ASPs to be stable from here, I guess on the lower end stuff? Jen-Hsun Huang: I would say that ASPs are relatively stable right now and we are focused on differentiating our products with PhsyX and with CUDA, with GPU computing and the competition’s products are really graphics only and as more and more applications come out that have GPU computing capabilities and ports, and as more and more games have physics, we are going to focus on differentiating that way. S Craig Berger - Friedman, Billings, Ramsay: Thank you.

Our next question comes from the line of Shawn Webster with J.P. Morgan. Shawn Webster - J.P. Morgan: Good afternoon. Thank you for taking my questions. Just honing in on the gross margins for a second, can you clarify something -- did you say that the inventory that you got in, you had an inventory reserve benefit in Q1, did I hear that correctly?

What I indicated was that we had inventory true-ups, some of which were unfavorable, some of which were favorable, the net of which, when you netted that against the products that they related to and we sold was a net unfavorable impact on the quarter. Shawn Webster - J.P. Morgan: So it hurt gross margins?

Correct. Shawn Webster - J.P. Morgan: Okay. And then on the segment level, given the -- if you ex out the options write-down, did your desktop and notebook gross margins fall sequentially, GPU?

What was the first part of that though? Can you repeat the first part of that? Shawn Webster - J.P. Morgan: If you take out that $11 million charge to COGS and you just look at your segment gross margins, desktop GPU, notebook GPU --

Yeah, we don’t typically look at that included in there anyway. Okay, yes, I understand what you are saying -- no, they did not. Shawn Webster - J.P. Morgan: They did not fall sequentially?

Correct. Shawn Webster - J.P. Morgan: Okay. So circling back then to the reserve, bad news, what was the dollar magnitude of that?

We’ve really not broken that out. Shawn Webster - J.P. Morgan: I see. Okay, and then as options, looking at options going forward, are they going to stay at the $25 million run-rate?

That’s about right. Shawn Webster - J.P. Morgan: Okay, and then as far as channel inventories, Jen-Hsun, earlier you mentioned that you believe that at this -- and this is what we are all trying to figure out, is what is in-demand, what is catching up with in-demand -- how do you see channel inventories right now and as you look at your various lines of business, including chipsets, desktop, notebook, which do you think still have some catch-up to do and which do you think have caught-up with in-demand? Jen-Hsun Huang: It’s harder for us to tell on notebooks because we don’t monitor sell-outs on notebooks. They are OEM products. But in terms of desktop products, we know that our channel inventory is near all-time lows, and so we continue to have spot shortages of products here and there. And so we are -- my sense is that based on what we are selling in and based on what is selling out and what we believe the channel inventory to be, the market looks relatively stable right now. Shawn Webster - J.P. Morgan: Thank you very much.

Our next question comes from the line of David Wu with Global Crown Capital. David Wu - Global Crown Capital: Yes, I am afraid I need some help on understanding gross margin guidance for Q2 -- since the workstation business is not -- it’s not moving up or down as a percentage of revenue, I see a significant bump in your gross margin guidance for Q2. Is that a function of the mix of 55-nanometer or any new products relative to 65-nanometer to give you this meaningful lift in gross margin quarter on quarter?

That is certainly a piece of it, yes, absolutely. David Wu - Global Crown Capital: So that must be the biggest piece, right? Because essentially we are not talking about major differences between workstation business and the rest of the company.

Well [there are other] cost reduction measures that we’ve taken as a company. David Wu - Global Crown Capital: I see. Okay. The other thing I was wondering, essentially to expect a nice recovery in the professional solutions business, I guess just look to IT spending, is that the way to look at it? If we have an IT spending recovery in the second half of this calendar year, then the highest gross margin business would come back. Jen-Hsun Huang: I think that’s not a bad surrogate, but we also have to think along the lines of creating new products that can save our customers money. We demonstrated at the National Association of Broadcasters the world’s first digital in graphics compositor digital out product and it’s -- we call it Quadro DVP, digital video pipeline. And it’s the first of its kind ever built and it replaces quite a large amount of servers and switches and video mixers and the reception has been just fabulous. And so what we need to do is get into production. As you know, more and more of the broadcasters are streaming off on the web and this product is designed to be able to record in real-time and composite in real-time and stream it real-time on the web. And so that is a growth market and so we think that there are opportunities for us to innovate our way out of this, even if the IT spending doesn’t come back in the near future. So we have all kinds of ideas that we are working on. You’ve been following us a long time -- we’re a pretty relentless bunch of guys and we have lots of good ideas and in spite of challenges, there are always ways to grow. You know, you look at ION, it’s our fastest growing business because we’ve tapped into a movement towards low-end advanced mainstream computing. You saw that we are gaining share. You saw that we are creating new products like TESLA and TEGRA, both of which saves money, and so we can find new ways to grow, even if the economy is challenged. David Wu - Global Crown Capital: Thank you.

Our next question comes from the line of Suji DeSilva with Kaufman Brothers. Suji DeSilva - Kaufman Brothers: Good afternoon, guys. Nice job on the quarter and inventories there -- in the 5% sequential guidance, is that typical -- is that the linearity you are expecting that similar typical years or is this year any different somehow?

Traditionally our July quarter is seasonally the weaker quarter of the year, one of the weakest quarters of the year. Suji DeSilva - Kaufman Brothers: I meant the linearity month to month.

In terms of the second quarter or the first quarter? Suji DeSilva - Kaufman Brothers: Correct -- no, the coming quarter.

I think the second quarter will be pretty close to the same linearity we had in the first quarter, which was better than average. Suji DeSilva - Kaufman Brothers: Okay, and then as we look at the consumer ultra low voltage, CULV opportunity, is that neutral for you, Jen-Hsun, or do you think that’s an opportunity in terms of your content? Jen-Hsun Huang: That’s neutral for us because we don’t participate in the mid-range of notebooks anyhow. If you look at our historical notebook participation, we have been only on the top third of the market and the bottom two-thirds of the market has been integrated for just about forever. We entered into the low-end part of the marketplace recently with MCP 79 or ION and so we are taking share in the mainstream and the low-end part of the market. What’s exciting to me is come Windows 7 and when DX Compute comes out, the difference between a computer that has DX Compute accelerated by a GPU versus one that does not is not a 10%, 15%, it’s 10, 20, 30 times. I just don’t know how -- and it’s not for games. It’s for making movies for your grandparents. And we know that one of the fastest growing consumer products right now is the flip video camcorder and the Sony Wedding -- those things are selling like hotcakes, and they are HD camcorders. People are making home movies and they want to create a home movie and post it on the web or burn a DVD. And so I think the -- finally it’s possible to do video editing because of DX Compute and because of the GPU underneath it that is not excruciating. I mean, it’s a delightful experience and one of these days, if you get a chance to drop by, we’ll just show you how to do it. It’s just incredibly easy. When you can move a video file around and store it the way that you save files, you know, it changes everything. This is going to be one of the major usage models for Windows 7 and so we are excited about that and I think that all computers, and I made this comment in my remarks, that we believe and certainly I believe that every computer will benefit with GPUs in it. It will reduce the power. One of the most -- if you read review so the Macbook Air, that has a rather large GPU, GeForce 9400, in a ultra thin and light computer and the power is better than it was before with Intel integrated graphics. People remark about that all over the web, and so it’s because GPUs, using the right tool to do the right job, saves power and when BNP Paribas and others discover that by using the GPU, you can save 200 times the energy because you run a process faster and it consumes less power, you save a lot of energy and energy consumption comes right out of the battery. And so I think that more and more people are just starting to discover that adding another processor that does the right job on the right -- you know, using the right tool for the right jobs, it really saves power, really saves energy. Suji DeSilva - Kaufman Brothers: Great, that’s helpful color and one last question, if I can squeeze it in -- Jensen, in terms of TEGRA versus ION, which one do you think has a larger unit TAM? I’m assuming -- I think it’s TEGRA but if you can confirm that. And which one do you think will have more units in the marketplace in say two to three years, TEGRA or ION? Jen-Hsun Huang: Oh my gosh, TEGRA -- TEGRA, of all of the products in our company, TEGRA has long-term the largest TAM. And the number of -- Suji DeSilva - Kaufman Brothers: In two or three years, you believe there will be more TEGRAs out there? Jen-Hsun Huang: Oh yeah, I think in two or three years -- surely, surely. I think the -- TEGRA is -- you know, we’ve been investing in TEGRA now for about four years and we have one of our best teams in the company working on this. There’s 500 people working on TEGRA and to build a computer completely from scratch that first on the size of a penny and deliver a full high definition experience, consume less than one watt, it’s just -- when you see it, it’s just absolutely magical and we -- it’s possible to do that and we are just blowing people away when we show it to them. This is -- I really believe this is the second personal computer revolution. We happen to be fortunate to have in our careers experienced two computing revolutions. This is it. We want to be all over it, and so this is an exciting time for TEGRA. Suji DeSilva - Kaufman Brothers: Great. Thanks for the color. Good luck, guys.

There are no more questions at this time. I will now turn the call over to Jen-Hsun. Please go ahead. Jen-Hsun Huang: Thank you for joining us today. We look forward to reporting our progress in Q2. Thank you.

Ladies and gentlemen, that does conclude today’s conference call. We thank you very much for your participation and we ask that you please disconnect your lines. Have a lovely afternoon, everyone.