Michael Hara - Vice President, Investor Relations Jen-Hsun Huang - President, Chief Executive Officer andDirector Marvin D. Burkett - Chief Financial Officer Ajay K.

Puri - Senior Vice President - Worldwide Sales

Hans Mosesmann - Raymond James Heidi Poon - Thomas Weisel Partners Shawn Webster - J.P. Morgan Simona Jankowski -Goldman Sachs Gurinder Kalra - Bear Stearns Michael McConnell - Pacific Crest Securities Tayyib Shah - Longbow Research Peter Karzaris - Citigroup Uche Orji - UBS Daniel Ernst - Hudson Square Research Sidney Ho - Merrill Lynch Nicholas Aberle -Caris & Company

Good afternoon and welcome to NVIDIA's conference call forthe third fiscal quarter ended October 28, 2007. On the call today for NVIDIAare Jen-Hsun Huang, NVIDIA's President and Chief Executive Officer; and MarvBurkett, NVIDIA's Chief Financial Officer.

Before we begin today’s call, I would like to take care ofsome general administrative items. Your line has been placed on a listen-onlymode until the question-and-answer segment of today’s call.

During this call, we will discuss some non-GAAP financialmeasures about net income, diluted net income per share, and gross margin whentalking about our results. You can find a reconciliation of these non-GAAPfinancial measures to GAAP financial measures in our financial release, whichhis posted on the investor relations page of our website at www.nvidia.com.

Unless otherwise noted, all references to research numbersthroughout the call come from Mercury Research. This call is being recorded.

If you have any objections, youmay disconnect at this time. Please be aware that if you decide to ask aquestion, it will be included in both our live transmission as well as anyfuture use of the recording.

Also, shareholders can listen to a live webcast oftoday’s call via the investor relations page of our website at www.nvidia.com. The webcast will be available for replay until the company’sconference call to discuss its financial results for its fourth quarter fiscal2008.

During the course of this conference call, we may makeforward-looking statements based on current expectations. Forward-lookingstatements, including statements as to the importance of uses for [VB use], ouroutlook, the impact, features, performance and availability of our products andtechnologies, our strategies, our growth and growth drivers, pertaining tofuture events and are subject to a number of significant risks anduncertainties.

The company’s actual results may differ materially from resultsdiscussed in any forward-looking statements. For a complete discussion of factors that could affect thecompany’s future financial results and business, please refer to the company’sForm 10-Q for the period ended July 29, 2007, and the reports on Form 8-K filedwith the Securities and Exchange Commission.

All forward-looking statements are made as of the datehereof based on information available to us today and, except as required bylaw, the company assumes no obligation to update any such statements. Thecontent of the webcast contains time-sensitive information that is accurateonly as of November 8, 2007.

Consistent with the requirements under Regulation FD, wewill be providing public guidance directly in the conference call and will beunable to provide significantly more information in offline conversations orduring the quarter. Therefore, questions around our financial expectations shouldbe asked during this call.

At the end of our remarks, there will be time for yourquestions. In order to allow more people to ask questions, please limityourself to one question.

After our response, we will allow one follow-upquestion. I will now hand the call over to Jen-Hsun.

Thanks, Mike. Good afternoon and thank you for joining us.Today we are pleased to report record revenue, record net income, and recordgross margin.

This is also our first billion dollar quarter. For our third quarter, revenue grew approximately 19%sequentially from Q2 and 36% from last year to a record $1.12 billion.

GAAP netincome increased more than 121% year over year and GAAP gross margin improvedby 550 basis points from a year ago to a record 46.2%. Let me review some of our recent achievements.

As the firstGPU company to reach the billion dollar quarter level, NVIDIA continues to beone of the fastest growing semiconductor companies in the world. Our GeForcedesktop and notebook GPU product lines each achieved record revenue.

Thedesktop GPU product line grew 33% year over year and the notebook GPU productline grew 120% from last year. Our standalone notebook GPU share grew to 72%, up from 52% ayear ago.

In September, we shipped our first ever single-chipmotherboard GPU for Inter processor based desktop PCs, the NVIDIA GeForce 7000GPU family. The GeForce 7000 family delivers the performance of an entry leveldiscrete GPU and leading graphics compatibilities when compared againsttraditional integrated graphic solutions.

We estimate the Intel segmentrepresents approximately 40 million units of new addressable market opportunitynext year and expect it to be a strong growth driver for our GeForcemotherboard GPU business. In October, we launched the new GeForce 8800 GT GPU, thefirst in our family of 65-nanometer desktop GPUs.

The 8800 GT combinesbest-of-gaming performance and best in HD playback at the $199 price point.Reviewers are calling the 8800 GT the next GeForce 4 TI4200. The TI4200 wascalled the perfect GPU at its time because it was simultaneously modern, highperformance, and well-priced.

The TI4400 was one of the most successfulproducts in our history. The widely recognized tech website, AnandTech, wrote: “It’sreally not often that we have the pleasure to review such a product soimpressively positioned.

The 8800 GT is a terrific part and is hitting thestreet at a terrific price. The performance advantage and price utterlydestroys our perception of the GPU landscape.”

Our Quadro Professional Solutions business achieved recordrevenue and grew 37% year over year. During the quarter, we launched seven newQuadro solutions and most notably, the Quadro FX 370 and 570, which deliver ISBcertified hardware at sub $200 price points.

The computer aided design industry is undergoing a massivetransition from 2D illustration to worldwide collaborative 3D design, and couldrepresent tens of millions of new CAD seats over the coming years. We believe the FX 370 and 570 are ideal solutions for theentry-level designer and we’ll continue to accelerate our growth in theprofessional solutions segment.

And finally, we began shipments of the Tesla C870 GPUcomputing processor and the 870 desk side super computer products this quarter.The adoption of Tesla and the CUDA C language programming environment and toolsuite continues to accelerate. We believe we now have more than 3,600developers and 14 industry categories working with CUDA on excitingapplications ranging from automotive visions systems, biological simulations,computational fluid dynamics, seismic processing and imaging, speech synthesis,computational finance, quantum molecular dynamics, protein folding to computervision.

Let me turn the call over to Marv to discuss our financialresults in more detail. I will return in a moment to discuss our businesses andgrowth drivers for Q4 and beyond.

Thanks, Jen-Hsun. Today we’ll be looking at both GAAP andnon-GAAP results for our Q3 and nine months ended October 28, 2007.

The onlydifference between GAAP and non-GAAP is stock-based compensation and its taxeffect. As Jen-Hsun stated earlier, revenue for the third quarterwas $1.12 billion, which is up 19% quarter to quarter and up 36% year to year.Obviously it was a very strong quarter, and our concerns at the beginning ofthe quarter as to the sustainability of the strength we saw in Q2 nevermanifested.

Also at the beginning of the quarter, there were concernsrelated to production limitations. Through the efforts of our partners and ouroperation staff, we were able to overcome most of those limitations.

In a few cases, our revenue was limited by production butrelative to our concerns at the beginning of the quarter, these were minor. In our GPU business, the growth was led by notebook, whichgrew 41% quarter to quarter and 120% year to year.

The desktop business grew14% over the second quarter and was up 33% over the prior year. In the quarter,GeForce 8X products accounted for more than 80% of our desktop and notebookbusiness.

Our MCP business grew 23% quarter to quarter, as we begin tosee traction in our new Intel platform products. PSB, our workstation business, grew 20% over the secondquarter and 37% over the prior year.

Even our consumer business grew 6% overQ2. All in all, there was strong growth in all segments.

On gross margins, we reported GAAP gross margin of 46.2%,which is up 90 basis points from Q2. Non-GAAP gross margin was 46.4%.

We hadanticipated strong gross margin based on the growth in GeForce 8X products, theincrease in professional solutions, and the increase in PlayStation 3royalties. All of these contributed to the increase in gross margin.

We are again pleased with our progress. Operating expenses were $268 million GAAP and $238 millionnon-GAAP.

This was slightly higher than our guidance. A major factor in thisincrease was the improved performance and outlook for the whole fiscal year andhow that affected our variable compensation programs.

For the quarter, we had to accrue an additional $8 millionas a catch-up based on the increased financial performance and expectations.This is a one-time catch-up. We ended the quarter with 4,609 employees, which is up 236from the second quarter, as we continue to aggressively higher, particularly onR&D.

One-hundred-and-fifty-five of the 236 new employees were in R&D. Depreciation for the quarter was $33 million and capitalexpenditures were $70.4 million.

The increase in capital expenditures can beattributed to two factors. We bought additional testers of $22 million.

Thesetesters are consigned to our contractors in Asia for the increased production.We also purchased some land for $27 million in anticipation of buildingadditional space. Interest and other income was $19 million in the quarter,and the tax rate was adjusted down to 12% for the year-to-date.

This resultedin a tax rate for the third quarter of 11.7%. This slight downward adjustmentresults from more international sales than anticipated, as well as higherR&D tax credits.

On the balance sheet, cash and marketable securities endedthe quarter at $1.85 billion, which is an increase of $281 million from thesecond quarter, despite repurchasing $125 million of stock during the quarter. Operating cash flow hit $400 million in the quarter for thefirst time.

Accounts receivable were $552 million, an increase of only $44million from the second quarter as the even profile of shipments during thequarter helped collections. DSO for the quarter was 45 days, down from 50 days in Q2.

Inventory grew slightly to $306 million in spite of thestrong sales and production limitations. Most of the increase can be attributedto new products that were not introduced until after the end of the quarter.DSI for the quarter was 46 days.

On the outlook, we’ve had two consecutive excellent quarterswhere revenue has exceeded our expectations. Even with this, we currently seestrong demand for our products and as a result, we expect revenue to grow inour fourth quarter.

Revenue growth in the 5% to 7% range would be within ourexpectations. We expect our growth to be led by the continued strength inGPUs and new products in both GPUs and MCP.

For gross margin, we’ve made excellent progress and we’llwork very hard to maintain our gross margin. New products will help but we arecurrently ahead of our plan and -- currently ahead of our plan in our progress.

Operating expenses will increase in the fourth quarterdespite the catch-up that occurred in the third quarter. This increase is theresult of additional hiring and increased R&D expenses associated with newproducts.

A total operating expense increase in the 3% to 5% is reasonable. We would expect the tax rate to stay close to our 13% but ifthere is any adjustment, it would have a downward bias.

In summary, we expect an excellent Q4. I’ll now turn it backover to Jen-Hsun.

Thanks, Marv. We are entering the era of visual computing.Some of the most exciting applications required a GPU for the best experience.Industry expert PWC estimates the world wide videogame market to be $30 billionin size and expects the market to grow to $50 billion by 2010.

According to ComScore, 217 million videogamers immersethemselves in online virtual worlds and expect that number to grow 17%annually. To date, there has been over 200 million unique downloads ofGoogle Earth.

SketchUp makes it easy for millions of users around the world toconvert Google Earth into a full 3D world. Microsoft has shipped 85 millionunits of Vista and Apple’s new Leopard looks amazing and is a step forward inUI design.

Both demand GPU to deliver the best experience. Our computing experience is increasingly enhanced by theGPU.

As the largest GPU company and the world’s leading visual computingcompany, we are very well-positioned to continue to lead this revolution. Near term, we see multiple growth drivers.

First, GeForcediscrete GPU -- GeForce GPU grew to 21 million units in Q3, up 30% from a yearago. The combination of our technology leadership, great content support, andthe ever-increasing importance of the GPU in our computing experience arecontributing to drive our growth.

We estimate the installed base of GeForce tobe approximately 200 million units. That makes GeForce the largest game consolecommunity and a target-rich environment for game and application developers.

We believe the PC game market is continuing to grow. Ouroverall enthusiast GPU segment grew 35% year over year.

The GPU enthusiast GPUmarket grew 170%. Our strategy is to make GeForce one of the most importantprocessors of the visual computing era through technology leadership,increasing programmability, great content experience, and promoting our greatbrands.

Second, GeForce motherboard GPU -- GeForce motherboard GPUsgrew to 10 million units per quarter, up 50% from a year ago. The GeForce 7000is off to a great start.

We are now the only chipset supplier to support bothIntel and AMD processor platforms, and the only branded integrated GPU supplierfor the Intel processor platform. The integrated graphics opportunity represents approximately60% of the world’s PC market.

Our strategy is to bring the benefits of GeForceto the most sensitive price segments while creating exciting platformarchitectures like SLI, hybrid SLI, and ESA. ESA, which was recently announced, stands for enthusiastsystem architecture.

It’s a standard for system information protocol that linksthe systems various critical components, such as fan, power supply, smartchassis, GPU cards, and motherboards. It enables a unified architecture forapplications and users to control and optimize performance of their system.

SLI, hybrid SLI, and ESA are examples of how NVIDIA createsarchitectures that advance the capabilities of the PC. Third, global proliferation of industrial design is drivingQuadro growth -- NVIDIA's Quadro brand is the de facto standard for [inaudible]visualization.

Quadro is not just a GPU. Quadro is a professional class of GPUsthat incorporate features demanded by creative professionals, as well assoftware that completes a solution need for each vertical market, whether auto,medical imaging, film, or financial markets.

We are experiencing multiply simultaneous dynamics in theprofessional market. Traditional 2D design and illustration is transitioning tocollaborative 3D design and product lifecycle management.

Globalization isforcing multi-side design teams around the world to adopt common platforms, andis fostering the growth of local industries in China and in India. All thesedynamics are expanding the workstation TAM.

Fourth, GPU computing with CUDA and Tesla -- CUDA is a dataparallel programming environment build on C. CUDA runs on all the millions ofG80 based and beyond GPUs, whether Quadro, GeForce, or Tesla.

Tesla is the brand of GPU software systems solutions that istargeted at the high-performance computing market. The initial adoption ofTesla will be inclusion into super-computing clusters.

Next year, we should seedesk side personal super-computing workstations powered by Tesla for dataparallel super-computing and Quadro for interactive visualization. And with CUDA on GeForce, we will quickly reach 100 millionunit per year run-rate for CUDA powered GPUs for the consumer market.

Forconsumers, CUDA on GeForce will enhance applications like video and imageprocessing and physics processing for games. CUDA is one of the most revolutionary and disruptive ideasfrom our company.

CUDA has ignited interest on GPU computing all of the world.There is growing understanding that the data parallel architecture of a GPU isradically different than that of a CPU and for a large class ofcompute-intensive data parallel applications, the GPU can increase performancefrom 10 to several hundred times. Fifth, we expect our first application processor to sampleat the beginning of next year.

We believe another personal computer revolutionis about to happen. Mobile devices like phones, music players and portablenavigation devices will all increasingly become multi-function, multi-taskingpersonal computers.

If so, the architecture of these devices will increasinglybecome consumer PC like and be capable of delivering all the entertainment andweb experiences we enjoy on a PC today but in the form factor that fits nicelyin your hands. Our mobile strategy is to drive the second personal computerrevolution by creating a from the ground up application processor and system ona chip that enables this experience.

AP15, as it is called internally, is the culmination ofseveral hundred man years of R&D. The mobile application processor is anarea where we can add a tremendous amount of value and represents a severalhundred million units a year growth opportunity.

We are happy to take your questions now.

Hello, can you hear me? Congratulations, guys.

A quickquestion; the GeForce 7000 motherboard GPU, what kind of average selling priceare we talking about here, and are they consistent with the average sellingprices of the A&B platform version?

The ASPs on the MCP73 or the GeForce 7000 is slightly higheron the Intel side, but it should be targeted -- we are targeting that productto be in the mainstream price sensitive segment so that we can bring GeForce toas many people as possible. That’s a rather large segment and we think itrepresents about 40 million units of incremental opportunity for us next year.

Is that a $50 ASP, a $100 ASP? I just want to get a generalsense of the magnitude.

Oh no, it’s in the teens. It’s designed to be on themotherboard.

It’s intended to be in the teens and we want it to be asaffordable as possible so that we can address the largest possible marketsegments.

Okay, great. That’s it.

Thanks a lot and congratulations.

Hello? Can you hear me?

Yes.

Can you describe what you expect further for notebooks? Iknow the general trend of desktop to notebook transition is still there, butmost of your wins have been indiscrete.

As AMD and Intel come up with theirintegrated graphics platform, also supporting DX10, where do you think you cantake your market share gains to next year and after that?

Well, it’s really hard to say what our market share will bein the future but we’ve been competing against integrated graphics for quite along time and our ability to succeed will depend on continuing to do the typeof things that we do well, which is come up with great ideas, like SLI andhybrid SLI, and bring value to the marketplace like we do with GeForce andQuadro. So we’re going to continue to do those things and if we do our jobswell, we should continue to grow and if we don’t, then obviously thecompetition will do better.

But do you think you might have a disadvantage because ofthe power consumption factor?

How is their integrated graphics lower power consumptionthan ours? In fact, I think that you know, probably, that NVIDIA's G8Xarchitecture is the most efficient performance per watt GPU in the marketplacetoday and that explains why we’re able to get our enthusiast level GPUs into asingle slot with a single slot fan, why our fan noise is substantially lowerand obviously our measured power to be substantially lower.

That’s somethingyou can do with architecture, that’s something you can do with innovativecircuit design techniques, and so on and so forth, and system technologies tomanage it at the system level. So there are all kinds of competitive capabilities for us toinnovate and power and we believe we are absolutely world class in that area.

Okay, great. Thank you.

Thank you very much for taking my question. Can you give anupdate -- I mean, a lot of folks, especially investors in the PC chip relatedcompanies, are concerned on linearity, risk of double ordering, have thingsbeen too good for too long -- can you guys share with us some of your thoughts?I think Marv, you had some comments on linearity.

Maybe you could talk about orderlinearity as the quarter progressed, how your backlog looks, and any risk thatyou can tell in terms of doubleordering?

Our Q3 was one of the most linear that we’ve had. Thestrength that we saw in orders in Q2 continued straight through Q3, and so ifyou wanted to look at a backlog, we are not a backlog focused type company butthere was no change.

The orders and the shipments were ratable all the waythrough. Obviously you are always concerned about is there any double ordering goingon, but we don’t see the evidence of that.

The way I would -- the way I think through that problem isfirst of all, we don’t know what we don’t know, and obviously nobody does. Andthe marketplace is rather robust, and I think it’s rather robust for us for avariety of reasons.

I think the -- first of all is new products always helps,and the 8800 GT is arguably the best product that NVIDIA has built in fiveyears. That’s what everybody is telling us, that’s how we feel about it, and wehave very, very big hopes for it.

We have MPC73, which is our first product of that categoryand bringing GeForce to the Intel motherboard is pretty exciting stuff, and theearly adoption has been wonderful. Both of those products we just can’t make enough of, andthere are good reasons for their growth.

I think overall, the GPU dynamic ispretty clear now, that PC games, online games is one of the fastest growingapplication sectors. Vista is doing well.

Leopard is amazing. There are moreand more applications that in combination with a GPU is just a betterexperience.

And then we have new innovations like Tesla and CUDA, andthere is a very logical reason why there is industrial growth in design. Whenwe globalize the China and India and other Eastern European countries and wecollaborate across the network and we design 24 hours a day, it makes perfectsense that you would need compatible workstations all over the world.

And simultaneously, some of these economies are no longerjust manufacturing economies but they are moving into design economies, and soas you know, China is moving very, very quickly up the food chain and more andmore unique designs are coming out of China. Well, they need workstations forthat.

I think if you combine whether it’s new products that we areintroducing in the market that we serve today, the importance of the GPU, newindustry growth form workstations, or a new disruptive technology that we’vecreated with Tesla and CUDA -- those are all important reasons why we are growing.

Thank you. You guys mentioned that you had a couple of areasthat were still tight from a capacity perspective.

Could you share with us whatareas those are?

Jen-Hsun just mentioned a couple of them; MCP73 and some ofour GeForce 8 products were capacity limited or production limited in thequarter.

Okay. Thank you very much.

Thanks very much. I just wanted to get a better sense onyour Q4 guidance; how much of that is based on your expectations for furthershare gains versus the end market growth for other factors, such as potentiallyASP increases?

We don’t count on share growth. That happens after you aredone counting it and so -- unless it’s a design win or whatever it is that weknow, we don’t typically count on share growth.

So we count -- we look at thestrategic position of our products, we look at the new products that we’reintroducing and therefore we’ve got some confidence on its pricing power. Wecount on new markets that we are entering opening up and so we count on avariety of things.

And of course, OEM design wins are OEM design wins, butotherwise we try not to be too bullish on market share wins.

We also don’t anticipate any changes in ASPs in the variousmarket segments. That’s not [ending growth].

Okay, so it sounds like a lot of it is just the end marketcontinues to be very robust.

Yes. And we are entering new markets and we are creating newproducts for existing markets as well.

So those are -- when somebody -- when westarted to ship Tesla, that’s a product that’s one of its -- it’s the first ofits kind and it adds so much value and the people that buy it initially arepeople who are desperate to have more computing resources. Products like the 8800 GT, it’s an existing market that weserve but it’s very disruptive because of its price performance is just soterrific and it really promotes very, very quick adoption and oftentimes iteven encourages pretty broad-based upgrades.

And you know that there’s a whole bunch of games coming outthis Christmas with DX10 and the games look really terrific, so -- so there’sjust a lot of reasons why the GPU is doing well.

I appreciate that color. Just one other question that issomewhat related; you mentioned that you think the motherboard GPU is anincremental 40 million unit opportunity.

These products seem to be competingvery effectively against the low end of the discrete GPU market and seem tohave a significantly lower price point. So do you view this as an incremental opportunity or do youview this to some extent as asubstitution of some of the existing stack of the product?

The GeForce 7000 really isn’t high performance enough to bea replacement for even our entry level GPU, so that’s not -- and you know ourdiscrete GPU, as one of the data points that Marv just mentioned, our discreteGPU will be vastly converted to DX10 very, very shortly. So this is reallytargeting the segment that’s underneath it, the 60% of the marketplace that wedon’t really serve today.

That’s very helpful. Thank you.

Thanks for taking my questions. My first question is on theGeForce 8800 GT.

It’s a great product but do you think there is any chance itmight be cannibalizing some other very high priced products? And given that it’s priced around $200, $249 but on65-nanometer, how does it affect your gross margins going forward?

Well, we always try to be thoughtful about how our productscan cannibalize their own products, but I think we understand this marketpretty well and if it’s possible to cannibalize our products, well, I’d ratherdo it myself than wait around for somebody else to come and do it, and so I’mnot too worried about that. That’s just really the nature of our business andwe have to stay aggressive.

We want to stay aggressive and we want to bring asmuch as we can to the market. I’m not inclined really to slow down because it somehowprotects my own business.

My own business will have to figure out a way to dealwith my own business. So that’s our strategy there, nice and simple.

But I thinkour high-end products will continue to be best of its kind, best of its class,and I think the market will be fine there.

As far as margins go, the margins on the 8800 GT areexcellent, well above corporate margins.

Thanks. Just a follow-up question on the general purposeGPU/Tesla, can you discuss some of the traction or the design wins you areseeing in the financial services industry and the headway you made there?

There is a lot of development going on using GPU computingfor computational finance. As you guys know, your industry has some of thebrightest mathematicians in the world and the amount of computation you guysneed is completely unbounded.

You just don’t seem to be able to get a largeenough server or enough of them. We’ve demonstrated that GPU can be used to acceleratefinancial computational finance by 10 times, 20 times, and severalapplications, 50 to 100 times.

And that’s a very, very large step up inperformance improvement, and so there’s quite a bit of development in thatarea. It’s happening all over the world.

It’s happening in London. It’shappening in New York.

This is an area that I think is going to be prettyinteresting for GPU computing.

Thanks very much.

Thanks. On the G92 or the 8800 GT, when are you expectingcrossover on that, relative to the 8800 GTS?

Crossover -- let me --

Let me explain it this way. I think this will do it.

We willship more 8800 GTs this quarter then we shipped last quarter of 8800 GTS. [Multiple Speakers]

Go ahead.

I’m sorry to interrupt -- this will be -- would you say thisis probably your most aggressive ramp in history, maybe of a product?

This is one of our most aggressive ramps and the reason forthat is because it is such a great product. We have a really rich backlog oforders for 8800 GT.

And although the market now knows what the competition hasand our customers know what the competition has and they are voting with theirorders. We are going to be very, very aggressive with 8800 GT.

It’sjust such a great product. Five years ago we had the 4200TI, TI4200 and themarket called it the perfect GPU.

And the reason for that was because it was abrand new architecture, it was extremely high performance, and it was veryaffordable. It was $199 and it lit that segment on fire and it was -- wecouldn’t build enough of that 4200 for a very long time.

We think we’ve got another 4200 on our hands and certainlythe market has effectively called it that.

I guess -- I know you don’t -- it’s tough to predict marketshare. You guys have obviously dominated this segment in the high-end.

With the-- could you talk about just the basis for having such an aggressive ramp? Imean, do you really feel like you could take more market share, or is this justyou are ramping in accordance to the demand out there, which is quite strong?

There’s always competition in our space. This is one of the-- the GPU industry is one of the most vibrant industries and the reason forthat has to do with the fact that Moore’s Law is still GPU’s friend, or GPU isstill Moore Law’s friend.

This is one of the few technology segments left wheremore transistors and new algorithms and new technology could enable betterexperiences. Almost all of the other semiconductor sectors are seeing smallerdie sizes every year and lower ASPs every year, but not the case with the GPU.

I expect this to be an area of quite a bit of vibrance for adecade to come. In terms of how quickly we ramp, that’s just the way we dothings.

We need to bring out new architectures and we need to bring it out asbroadly as we can because as soon as we launch one unit of 8800 GT, everybodyin the world is going to want it and so you might as well assume that you are buildingfor everybody in the world and so that’s kind of the approach that we take. And we want to stay aggressive as a company.

That’s just ournature.

And then a final question, just on the GeForce 7 series chipsetsfor Intel’s platforms, can you talk about the early traction you are seeing,both at OEMs and then maybe separately in the channel, and just how that’sprogressing and the outlook, if you have one, for next year?

We’re expecting to be every successful with OEMs as well asthe channel, and so it’s designed -- it’s designed to -- NVIDIA's brand and thequality of our technology and the rich support that we offer in drivers, as theindustry gets more complex with DX10s and OpenGLs and high definition videosand all of these different applications, our software capability becomes anincreasing advantage. And just because it’s integrated on the motherboarddoesn’t mean the software isn’t complex.

That’s an area that we are extremely good at, and so it’s --my sense is that we will be very successful in both OEMs and the channel. Andyou’ll see it soon.

Okay, and Marv, have you guys thrown out a target for nextyear within that business, or just quantified what the opportunity could be fornext year? I don’t know if you have or have not.

No, we have not.

Would you care to, or --

Only it’s a significant growth driver next year, but no, wehaven’t quantified it.

Okay, great. Thanks, guys.

Congratulations on the quarter. The notebook market has beendoing very well lately, but maybe partly at the expense of the desktop segment,where you have higher exposure.

Can you help us understand how desktopreplacement by notebooks is likely to affect your business going forward, nowthat you already have 70%-plus share in notebooks?

The notebook market is certainly doing very well and Iexpect that one of the areas where the notebook market is just starting to seegrowth but it will see a lot more growth in the coming years is the gamingnotebook segment, and the mobile workstation segment. These two segments aregrowing very quickly and I expect that we’ll be able to add a lot of value tothose two platforms in the future.

We’re not too hung up about where people buy our GPUs. We’redelighted by the proliferation of platforms and whereas people typically tendto have one or two PCs, desktop PCs in their house, they may have four, and inmy case eight, laptops at home.

It’s a little bit like a cellphone, I guess andyou just buy a whole bunch of them over time. I think that the notebook market is not completely areplacement market, frankly.

I think that a lot of it is an additive market andcertainly it has exceeded most people’s expectations.

Another question along the same lines, as your footprintwithin the notebook market has grown, have you been finding this market morecompetitive than your discrete GPU business, given that in this business, Intelcan bundle their chipsets with their CPUs, if they want to?

Intel is definitely a very competitive company and we are --we’ve been competing against bundling for quite some time, whether it’s pricebundling or other bundling. The bottom line is we just have to add value.

We just haveto add value. NVIDIA is not a commodity player and we serve the marketplaceswhere we could -- where visual computing is really important.

If 3D matters toyou, and if your work matters to you and you do 3D work, whether it’s in designor film or medical imaging, then we could add a lot of value to you. And ifyour business really depends on having a great GPU and visual computingcapability, I think NVIDIA is really your partner.

Thank you.

This is Peter [Karzaris] for Glen Yeung. A question just onASPs; I was wondering if on a mixed basis, your ASPs were able to improve indesktops and notebooks from second to third quarter?

No, they were relatively flat.

Despite mix? And then on -- I noticed margins were up andyou talked about I think royalties from Sony as being one of the drivers.

Butconsumer revenue was up about 6%. I was wondering if you could give us anyother color around consumer revenue and then also, if you could just help usunderstand maybe the total impact that that had on, that royalties had on grossmargin improvement?

Well, you know, any increase in royalties is 100% grossmargin, so I would say that our royalty income from PS3 increased significantlyfrom Q2 to Q3. It more than doubled, so that had an impact on our grossmargins.

Was it the driving factor? Probably not, but it was one of the factorsthat improved gross margins.

The fact that that increase would probably account for mostof the increase in the consumer business is probably true.

Great. Thanks.

Can I just get a sense of where the professional servicesbusiness will go next quarter? I mean, I see your guidance and your[inaudible], but that division is pretty critical for driving overall grossmargin, so if you can give us some color as to what we should expect withinthat division next quarter, that would be helpful.

And a second question is about your handset strategy. Iunderstand your push on the apps processor direction, but do you see the lackof a baseline solution as something that could become a problem for theapplication of that strategy?

If you can give me some color, that would behelpful. Thanks.

I guess on the first one, we really haven’t and we don’tgive too much granular guidance at the business unit level. All I can tell youis that the professional solutions group is doing well and they arestrategically very well-positioned and they add a lot of value to themarketplace.

Our business of -- what some people call the workstationsbusiness, what we call the professional solutions business is really acombination of technology, GPU technology and a lot of software, systemcomponent technology, and expertise. We have one -- we have one of the, if notmy expectation to be the largest developer technology organization in the worldand we help inspire and we help solve some of the most challenging visualcomputing problems in the world through that organization.

So I expect it to do well. We haven’t really given it muchguidance.

With respect to our application processor business, we aregoing to focus on the segments of the handheld marketplace where computing isparticularly important. If you take a look at all the handhelds in the world,really with the exception of the iPhone, every other phone in the world wantsto be a computer but has a long way to go.

And this is where we could add a lotof value. NVIDIA is fundamentally a computer technology company.

Weare one of the world’s largest computer technology companies and there are veryfew consumer oriented computing platforms where we can’t, from the ground up,design an entire computer for you. So this is an area that we could add a lot of value.

We areseeing a lot of interest in the work that we are doing and when I said severalyears ago that this is going to be the second personal computer revolution andthat the phone is going to become a computer first and a phone second, at thetime it sounded kind of odd but I think it makes a lot of sense now.

That’s helpful. Thank you very much.

Thanks for taking the call. Two, if I might; first, on themainstream growth and maybe also the low end of the discrete, obviously in thedomestic market, so much enthusiasm around digital video and high resolutionphotography with things like YouTube and digital SLRs, and so that’s about --and the uptake of Premium Vista, I assume that that’s been a lot of the growththere.

But can you talk about that same market overseas where so much more ofthe overall PC market growth is, and particularly in developing countries like Indiaand China whereI assume the market is more price sensitive. And then secondly on the mobile phone business, you gave usa little bit of mapping for the app processor, but can you just give us alittle bit of color about the current mobile phones business and how that istracking, relative to expectations?

Thanks.

I would say that the developing markets are being drivenright now by online games, which is really a craze in China and India and theonline game market is really doing fabulously out there. Games are free and youpay for the service and you pay as you go, and it’s a really great way for themto meet their friends and meet people on the web.

So those -- that’s a real growth driver. Another one, ofcourse, is their purchasing power in the foreign countries are becoming quitegood and as a result, they can buy up on their configurations.

And one of thebest ways to improve your experience to buy up on the configuration is to add aGPU. Those factors are quite important growth drivers for us internationally,irrespective of Vista.

Internationally, Vista is doing well everywhere. I don’tthink it’s not doing well in China.

I frankly think that it is doing very wellin China and it will do very well in India as well. Any consumer will [enjoy]Vista.

With respect to the application processors, the handheldbusiness, we haven’t shipped much application processors. We haven’t shippedany of our AP15 yet, so all of our current handheld business is from theexisting handheld GPU business, which met expectations.

It’s not intended togrow and it’s likely to continue to decline. This quarter I think it declinedbut we are not expecting that business to grow because we are not out trying toget anymore design wins.

We are really focusing now on building our applicationprocessor and this is where we are going to drive the market.

Do you see a bit of an air pocket then between the currentgen, the mobile GPU that you have now and the integrated app processor?

No, not really, mainly because it’s not significant portionof our business right now.

Got it. Thank you.

Thanks for taking my question. It’s a question on grossmargin.

You are at 46.2% this quarter and I’m not going to ask for specificguidance, but if you look forward say for the next 12 months, what are some ofthe biggest endeavors that can improve margins, both at the gross and operatingmargin level? Is it more like a product mix between chipsets, [GPU Tesla] orbetween product families like the G92, or is there something else?

We’ve not increased our gross margins by raising pricesonce, and the reason for that is because it’s hard to grow while you areraising prices. And so we remain very competitive in the marketplace.

Where we’ve improved all of our gross margins is internaloperational improvements. And I’ll tell you that I have a lot of work left todo, so -- there are quite a bit of -- just the things that we can do inside,all within the walls of our company, we have many, many ideas on improvinggross margins through better operations, better execution.

The mix will affect gross margins, depending on where thegrowth comes from. But having said that, our total focus is improving the grossmargins on each of the business segments, and Jen-Hsun is right; there’s lotsof things that we could do better so I still see room for gross marginimprovement in each of the businesses.

One follow-up question; for the professional services group,can you tell us how did the average selling price do for the quarter? And also,if you can tell us how much was the contribution from Tesla during the quarter,which I don’t expect much, that would be great.

Thanks.

Tesla was very little. It’s just beginning to ship, so it’svery little.

And we’re expecting it to be small relative to the overall size ofthe company in its first year. The most important thing about Tesla is targeting it at thetype of applications where they can really use the help right away, whetherit’s oil and gas or imaging, medical imaging, or computational finance.

Thereare all kinds of applications out there that could really benefit from it.Meanwhile, we are driving CUDA, which is the programming environment, into allof our GPUs so that we can bring GPU computing to the masses. Both of those efforts are ongoing and I frankly think thatthe progress is extremely high and better than we had expected by far, by a lot.

As far as the ASPs go, ASPs are in the hundreds of dollars.They are not -- it gets to be a complex mix of products there, so let me justsay it’s hundreds of dollars.

So was it up from last quarter?

No, relatively flat.

Okay, great. Thanks.

Good afternoon. Nice quarter, guys.

Question had to do withASPs; I know we talked about ASPs here in the most recent quarter. You guyshave done a great job over the last couple of years in improving those.

What isthe expectation over time for ASPs? Do we have a substantial move higher fromcurrent levels based on Tesla?

The way we think about ASPs here, the way I think about ASPsis we have to make the GPU more valuable. The more programmable we make it andthe more applications take advantage of it, the more people will spend inbuying GPUs because it will enhance our computing experience.

Now that trend has been moving very aggressively over thelast couple of years, with all of the applications that I’ve already talkedabout and the growth of the gaming market and amazing applications like GoogleEarth and Microsoft’s Virtual Earth 3D. These types of applications are justcontinuing to make the GPU more important and so that’s our focus.

My expectation is absolutely the GPU ASP will continue toincrease, and the reason for that is because I expect to make it more valuableand people will see the value and hopefully choose to buy a better GPU.

Perfect. Looking back over the last couple of years, youguys have refreshed the halo product, the enthusiast desktop product abouttwice a year, it looks like every fall and spring.

You guys just did 8800 Ultraback in the spring. Should we be expecting another enthusiast refresh herebefore the end of the year?

Well, we are at the end of the year and -- we decided thatthe refresh that we would do this time was 8800 GT, and this is just a barnburner refresh. We are really, really proud of the 8800 GT and we are going toput our focus here.

From 8800 GT, you could obviously do SLI and soon you’ll beable to do three-way SLI, so you are going to be able to put a lot of GPUhorsepower into your system, starting with a very affordable 8800 GT, and so --this is our focus for now.

I’ll just sneak one more question in; Intel back inSeptember bought a small company called Havoc, does acceleration, physicsacceleration software. Just was wondering if you guys are in the market forthat IP.

I know you guys have worked with them in the past and how that maybehas an effect on the longer term landscape.

No, no current plans.

But no commentary regarding how their purchase of Havocaffects maybe their IP positioning relative to yours in physics acceleration?

Oh, I didn’t know that was the question you asked. You askedme about my plans.

I don’t have any plans. I don’t know why they bought Havoc.

Physics is -- physicsprocessing has a long ways to go and there are so many companies out there.There’s quite a few -- quite a few middleware companies out there that arecreating technology in this area, and many gamers, many game developersincorporate their own physics engine. So my sense is that there’s a lot ofinvention still left to do in this area.

I’m not sure why they bought thatcompany, to tell you the truth. It might give them some advantages with respectto Havoc but it obviously creates negative synergies everywhere else.

But that’s -- I don’t know why they did it, and so you’reasking really the wrong person. Strategically, I don’t know that it has anyreal bearing on the work that we are doing.

Thanks. Good luck in Q4, guys.

Thank you. NVIDIA's strategy is to be the world leader invisual computing by leading the GPU revolution while creating innovativetechnologies that enable and inspire amazing applications.

The GPU is increasingly central to our computing experienceand although hundreds of millions of users already enjoy 3D applications andUIs like Vista and Leopard, this is just the tip of the iceberg of thepotential of the GPU. We intend to drive our growth by continuing to extend theGPU to more applications, more platforms, and to more people.

Thank you forjoining us today. We look forward to reporting on our results for Q4.