Why Himax Tech Shares Skyrocketed

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 Taiwanese chip maker Himax Technologies (NASDAQ: HIMX  ) soared a whopping 34% today after tech gorilla Google (NASDAQ: GOOGL  ) agreed to acquire a small stake in one of its units that develops tiny displays.

So what: Himax said the investment will help the production of liquid crystal on silicon chips and modules that are used inside head-mounted devices such as Google Glass. The investment by Google also validates Himax's technology in the space and confirms that it will indeed be one of Google Glass' key suppliers, forcing analysts to increase their growth estimates substantially on the Taiwanese company.

Now what: The transaction is expected to close in the third quarter of 2013 subject to regulatory approvals and other closing conditions. "We look forward to leveraging this investment and our collective expertise with Google to create unique and transformational LCOS technologies for many years ahead," said Himax President and CEO Jordan Wu. With the stock now up a staggering 350% over the past year, however, I'd wait for a lot of the exuberance to fade before buying into that bullishness.

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  • Report this Comment On July 22, 2013, at 12:58 PM, Trumpace wrote:

    I think one should look further into the valuation and potential of Himax and consider two other factors than the Google investment. One being Himax on Friday's close was trading at just 2X book value, which for a tech company is very, very low. The other consideration is the stake Intel is holding in Himax. To a Motley Fool, is it possible Himax is a "Hidden Gem"?

  • Report this Comment On July 22, 2013, at 1:44 PM, EvanBuck wrote:

    @1 Good points - there's more to Himax than just what meets the eye with the Google deal. Like I said on my CAPScall pitch, Himax is a solid yet undervalued company.

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