InvenSense Has Tremendous Upside

The following video is part of our “Motley Fool Conversations” series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.

According to the latest data, Apple is still lagging in market share in China. Chinese handset makers are leading the way. The silver lining is that Apple’s loss could be InvenSense’s gain.

InvenSense makes motion sensor chips for electronic devices such as smartphones and tablets, especially those running Google’s (Nasdaq: GOOG  ) android OS. InvenSense noted in its Q4 conference call that electronics distributor Edom was a 10% customer. In its most recent quarter, it said HTC was a 10% customer. Even if Apple does cut a deal with China Mobile to sell the iPhone 5, there’s plenty of growth available for InvenSense as smartphones in China are still underpenetrated. David thinks InvenSense’s growth in China is being overshadowed by earlier issues with Qualcomm and the lawsuit from STMicroelectronics. Add in the growth in new, industrial markets and InvenSense looks very attractive today.

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David Meier owns shares of InvenSense. John Reeves owns shares of Google. The Motley Fool owns shares of China Mobile, Google, InvenSense, and Qualcomm. Motley Fool newsletter services recommend China Mobile and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On August 31, 2012, at 1:18 AM, maniladad wrote:

    Hi John, Saw that you touted InvenSense earlier in your article on "10 Reasons..." Just started looking into it and noticed that "In the last 5 years there has not been an insider stock purchase at INVN." (E-Trade Insider Activity) Also noticed that every stock option that is taken is immediately sold, especially noticible for Steven S. Nasiri, the Founder, Chairman, CEO, President and Secretary who seems to have been exercising stock options two or three times a week for months.

    Normally that would be enough for me to go on to the next candidate but I see that there was a huge exercise of stock options back in Nov 2011, and that two LLC's each got 15MM shares in that month. Information on major holders on Yahoo! Finance is essentially non-existent, which is extremely unusual for US stocks, but in the insider transactions section there is an ownership statement that Mr. Nasiri owned 11MM shares in Nov 2011. If he's holding that much stock, it's probably not too difficult to understand why he's not keen on gathering more. In addition I notice that his salary is 'only' $645K/year, and that the other officers are drawing 'only' around $300K/year. ('Only' in quotes because that's much less than most key executives are pulling down and because it's probably a lot more than most Fools are earning.) Living in Sunnyvale, CA ain't cheap so they probably all need that cash to pay their underwater mortgages.

    I'm going back to look further into the company. Any comments on the lack of information in Yahoo! Finance, on the status of insider activity and maybe on the status of the LLC's, whom I assume to be venture capitalists, would be greatly appreciated.

    Thanks.

  • Report this Comment On August 31, 2012, at 11:40 AM, RJMG wrote:

    What is the impact of potential slowdown of Android handsets after the recent patent litigation win by Apple over Samsung? According to Think Equity, INVN has 70% market share for motion sensors market in Android based handsets - i.e. a big chunk of their revenue comes from Android based handsets. Any insights there? Thanks.

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