Graphics card manufacturer Nvidia, which also makes the graphics chip for the PlayStation 3, has revealed that revenues dropped by 5 percent in its second financial quarter, as the company also reported a significant loss due to faulty notebook boards.

Revenues dropped from $935.3 million a year ago to $892.7 million, although for the full six months of the year so far, sales were actually up by 15 percent to $1.78 billion.

A $196 million charge against the cost of warranties, repairs and returns for faulty boards used in notebook systems contributed to a net loss for the quarter of $120.9 million. GAAP net income for the full six months was $55.9 million, compared to $305.0 million a year ago.

"Our Q2 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," said president and CEO Jen-Hsun Huang.

On the other hand, Huang said that the rest of Nvidia's businesses saw growth while the desktop segment languished -- the notebook GPU, MCP, and Professional Solutions groups grew a combined 27 percent year-over year.

"Though we approach the near term with caution, we remain very optimistic about the expanding universe of visual computing and the exciting growth opportunities made possible by CUDA, our general purpose parallel computing architecture,” said Huang.