OmniVision Technologies Shares Plunged: What You Need to Know

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 image sensor maker OmniVision Technologies (Nasdaq: OVTI  ) sank 14% Monday after slashing second-quarter revenue guidance.

So what: Today's warning comes on the heels of a report last month by Chipworks that indicated that Apple's (Nasdaq: AAPL  ) iPhone 4S uses an image sensor from Sony (NYSE: SNE  ) instead of OmniVision. While OmniVision's sensors probably won't get entirely cut out of Apple's future iterations, the drop in demand from other customers is now becoming a growing concern to investors.

Now what: OmniVision now sees second-quarter revenue of $212 million to $217 million, which is down from its prior view of $255 million to $275 million and way below the Wall Street consensus of $260.4 million. Management is obviously disappointed with the demand drop, but given that it also announced a $100 million repurchase program, the stock price might actually be a steal. "We believe our stock represents an attractive investment for OmniVision and its investors and that [the buyback] attests to our strong confidence in the long-term strength and viability of the company, its technology and its broad market and product portfolios," CEO Shaw Hong said.

Interested in more info on OmniVision? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days.

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