October 20, 2011
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of camera-chip specialist OmniVision Technologies (Nasdaq: OVTI ) lined up for a glamour shot today, jumping as much as 12.6% on heavy trading.
So what: Third-party teardowns of the Apple (Nasdaq: AAPL ) iPhone 4S have confirmed that OmniVision landed at least some business in the record-breaking device, in this case the lower-resolution camera facing the user. Also, another primary camera analysis by IHS iSuppli pegs the cost of the primary camera module at $17.60, which lines up with known prices for 8-megapixel OmniVision chips.
Now what: Share prices are now back pretty much where they were before the first teardown uncovered an unmistakable Sony chip in an iPhone 4S. Theories abound, ranging from a wholesale Sony (NYSE: SNE ) invasion to some dual-sourcing arrangement by Apple or even OmniVision and its manufacturing partners turning to Sony as their own chip yields couldn't fill the Apple order on time. If you thought that Sony had kicked OmniVision out entirely, you need to adjust your focus. Other than that, we won't know much more until OmniVision reports earnings at the end of November. In the meantime, expect wild swings both up and down as this hyper-volatile stock remains shrouded in mystery.
For my money, OmniVision remains a screaming buy at these prices even if it had to eat the price difference on Sony's more expensive chips in a peer-to-peer bailout.
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