future events or circumstances may result in a charge to earnings in future periods due to the potential for a write-down of goodwill in connection with such tests.



Results of Operations



The following table sets forth, for the periods indicated, certain items in our consolidated statements of income expressed as a percentage of revenue.

Revenue

 

During the first quarter of fiscal 2006, we reorganized our operating segments to bring all major product groups in line with our strategy to position ourselves as the worldwide leader in programmable graphics processor technologies. We now report financial information for four product-line operating segments to our Chief Executive Officer, who is considered to be our chief operating decision maker, or CODM, as follows: the GPU Business, the MCP Business, the Handheld GPU Business, and the Consumer Electronics Business. Revenue in the “All Other” category is primarily derived from sales of memory.  Please refer to Note 15 of the Notes to Consolidated Financial Statements for further information.

 

Fiscal 2005 was a 53-week year, compared to fiscal 2006 and 2004 which were 52-week years, and we believe that this extra week may have had a positive impact on our revenue in fiscal 2005. However, we are not able to quantify the effect of the slightly longer year on our revenue.



Fiscal Year 2006 vs. Fiscal Year 2005

 

Revenue was $2.4 billion for fiscal 2006, compared to $2.0 billion for fiscal 2005, which represents an increase of 18.2%. A discussion of our revenue results for each of our operating segments is as follows:

 

GPU Business. GPU Business revenue increased by 22.6% to $1.7 billion for fiscal 2006 compared to $1.4 billion for fiscal 2005. The increase was the result of increased sales of our GeForce 6 and GeForce 7 families of desktop GPUs that serve the high-end GPU segment, offset by a slight decline in sales of our mainstream GPU products. In addition, sales of our NVIDIA Quadro professional workstation products and notebook products continued to improve due to an increased mix of GeForce 6-based and GeForce 7-based products, which resulted in an increase in average selling prices.



MCP Business. MCP Business revenue was $352.3 million for fiscal 2006, compared to $175.7 million for fiscal 2005, which represents an increase of 100.6%.  The overall increase in MCP Business revenue is primarily due to increased sales of NVIDIA nForce4 products, which we began selling during the fourth quarter of fiscal 2005, and an increase in average selling prices. The overall increase was offset by a decrease in sales of NVIDIA nForce3 and NVIDIA nForce2 products.

Handheld GPU Business. Handheld GPU Business revenue was $58.7 million for fiscal 2006, compared to $45.9 million for fiscal 2005, which represents an increase of 27.9%.  The overall increase in Handheld GPU Business revenue is due to an increase in average selling prices of high-end feature phone products and revenue recognized as a result of a development contract.

 

Consumer Electronics Business. Consumer Electronics Business revenue was $170.2 million for fiscal 2006, compared to $260.0 million for fiscal 2005, which