CEO and President Jen-Hsun Huang revealed during NVIDIA's second quarter financial earnings call last evening the company's GPU shipments dropped 20 percent within the last quarter. Moreover, the average selling prices of the GPUs dropped by 25 percent. The loss incurred amounts to $120.9 million, contrasting the  $172.7 million of profit recorded the year previous.

All in all this hasn't boded well for NVIDIA's financial standings: company revenue decreased by five percent to $892.7 million (this time last year they stood at $935.3m).

This is particularly striking news because it's the first quarter in nearly six years they've recorded a loss. Reportedly the 'mood on the call was understandably sombre.' What goes up must come down, though, so it appears.

The losses weren't exactly unexpected, however: Huang pins it on a variety of factors: economic slowdown, large inventory of 65nm chips, over-pricing, underestimation of the competition (AMD), delays to integrated graphics chipsets for Intel processors, and more:

“The desktop PC market around the world weakened during the quarter. And our miscalculation of competitive price position further pressured our desktop GPU business. We have a great product line-up and, having taken the necessary pricing actions, we are strongly positioned again. Our focus now is to drive cost improvements and to further enhance our competitiveness through the many exciting initiatives we have planned for the rest of the year.”

This also follows the news of its higher-than-expected failure rates on some notebook GPUs in July (you can read the newest details on that situation here).

It seems it would be best for the company to look at this as an opportunity to learn from mistakes and move forward, however, this will take some time:

[W]hen asked about when he expects the market to recover and for desktop GPU shipments to grow again, [Huang] said “it’s hard to say when it will recover.” Huang mentioned that the company is ready to ship 55nm chips in volume, but because of a large inventory of 65nm products, 55nm products will not carpet bomb the market until later in the year – as soon as 65nm inventory has been worked through.

It's not all bad though: he said, “The notebook GPU, MCP, and Professional Solutions groups grew a combined 27 percent year-over year."