Why OmniVision Technologies, Inc. Shares Plunged

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 specialist OmniVision Technologies, Inc.  (NASDAQ: OVTI  ) sank 10% today after its current-quarter outlook disappointed Wall Street.

So what: OmniVision's Q2 results -- profit more than doubled on a revenue increase of 2% -- easily topped estimates, but downbeat guidance for Q3 reinforces concerns over extremely volatile demand. Additionally, the disappointing guidance suggests that competition from local Chinese rivals continues to intensify.

Now what: Management now sees adjusted Q3 EPS of $0.28-$0.44 on revenue of $310 million-$340 million, versus the consensus of $0.43 and $399.5 million. "While end-market demand remains volatile, our scale, technology and product portfolio should position us well to weather such volatility over the coming years," CEO Shaw Hong reassured investors. Given OmniVision's still-rock solid balance sheet and cheapish forward P/E, now might even be an opportune time to buy into that long-term bull talk. 

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