OmniVision Technologies, Inc. Earnings: Is Growth Gone for Good?

Can the Apple supplier manage to keep its earnings rising?

May 27, 2014 at 10:48PM

On Thursday, OmniVision Technologies (NASDAQ:OVTI) will release its quarterly report, and investors have sent the stock rising recently on hopes that the provider of imaging sensors to Apple (NASDAQ:AAPL) and other customers will be able to enjoy in the success of the iPhone maker recently. Yet competition from Sony (NYSE:SNE) has posed a substantial threat to OmniVision lately, and with expectations for falling revenue and earnings compared to year-ago levels, it's uncertain whether shareholders really should count on positive results from OmniVision in the future.

Smartphones have generally replaced dedicated cameras for most users, and as a result, OmniVision's image-sensor technology was in high demand for a long time. Yet as smartphones got to be more popular, OmniVision had to deal with other entrants in the industry, and it suffered a common problem among Apple suppliers in relying more than it arguably should have on a single customer. What's next for OmniVision? Let's take an early look at what's been happening with OmniVision Technologies over the past quarter and what we're likely to see in its report.

Ovti
5-megapixel PureCel sensor. Source: OmniVision Technologies.

Stats on OmniVision Technologies

Analyst EPS Estimate

$0.27

Change From Year-Ago EPS

(12.9%)

Revenue Estimate

$292.11 million

Change From Year-Ago Revenue

(13.1%)

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can OmniVision earnings keep crushing expectations?
In recent months, analysts have had mixed views on OmniVision earnings, boosting their April-quarter estimates by a nickel per share but cutting their fiscal 2015 projections by a dime per share. The stock has climbed more than 30% since late February.

OmniVision Technologies gave an impressive quarterly report back in February, reporting 23% growth in net income despite seeing sales slump almost 17%. OmniVision's CEO pointed to the success of its PureCel image sensors, which he argues compete well on price while offering better pixel performance and using less power. OmniVision also gave positive guidance for the just-ended quarter, leading to the boost in analyst expectations. The report eased concerns that demand from Apple and other buyers could cause trouble for OmniVision if growth in mobile devices generally began to slow.

But the big threat to OmniVision Technologies remains Sony and other image-sensor makers. OmniVision has shared responsibility for supplying sensors to Apple for the iPhone 5s, but Sony's offerings got the better billing in the smartphone, and Sony's reputation has started to surpass OmniVision's among many reviewers. As growth in the smartphone area shifts from the relatively mature U.S. market to higher-growth areas in the Asia-Pacific region, OmniVision will have to work hard to keep Sony at bay on its home turf.

Still, OmniVision Technologies won't go down without a fight. The company is looking to offer a low-power chip for use in wearable computing devices, with its sensor being the first shutter sensor on the market to reach the milestone of providing 400-by-400 pixel resolution and 120 frames of video per second. Because of Sony's economies of scale, it's critical for OmniVision to provide superior performance in its more innovative designs in order to keep pace with its larger rival.

In the OmniVision earnings report, watch closely to see how the company is faring in China. With LTE rolling out, smartphone growth in China could be huge, but OmniVision needs to make sure that its offerings get their fair share of the market. Otherwise, OmniVision could let shareholders down by failing to make the most of its growth opportunity.

Leaked: Apple's next smart device (warning -- it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee that its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are even claiming that its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts that 485 million of these devices will be sold per year. But one small company makes this gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and to see Apple's newest smart gizmo, just click here!

Click here to add OmniVision Technologies to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Dan Caplinger owns shares of Apple. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers