It did warn us, but it seems the last financial quarter has been a tough one for Nvidia.

Nvidia reported revenue of $892.7 million for the second quarter, a decrease of some 5%.

This means that The company dipped into the red this quarter, with an operating loss of $120.9 million (22¢ per share).

The company has pointed to the $196 million warranty charge it had to take out after some of its chips were found to be faulty.

The company claims that the manufacturing issue in question affected a relatively small batch of parts, which it will repair, and that this charge should cover its costs.

Nvidia also admitted that its poor performance was down to it "underestimating its competitor," and mispositioning its new product introductions.

According to Ars Technica: "This issue has since been corrected, and the GTX 260 / GTX 280 are now far more accurately positioned against the HD 4800 series from ATI than they were when those products launched."

However, the bleak outlook continues into the next quarter.

Nvidia said: "Our second quarter financial performance was disappointing.

"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."