I seem to have underestimated the power of Grayskull. Wait -- I meant, the power of asset-light and fabless chip manufacturing. Not as catchy, but it'll do.
OmniVision Technologies
$183.3 million in second-quarter revenue was a 74% sequential improvement and a 12% year-over-year improvement. Itβs the highest sales level for the company since the beginning of 2008. Management pointed out that every conceivable division and product line participated in the boost, with cameras going into torrid numbers of cell phones, notebooks, and industrial applications.
What I misread was the quick-turn manufacturing capacity OmniVision has at hand. The company did suck down its inventories to the lowest level in three years, but did not complain about missing opportunities due to manufacturing restraints. Partner Taiwan Semiconductor Manufacturing
The high volume of phone cameras did have the dampening effect of pushing down the average selling price of OmniVision's products, as that product line carries lower margins than the notebook modules and such. On top of that trend, the company is getting more orders from North America, where business swings in highly seasonal patterns, and less from the not-so-holidayish Asian market, and that effect has moved some orders from the third quarter to the second.
In other words, the next quarter will come in a little short on the top line, after which we should see a little Father's Day bump in the spring. OmniVision isn't used to this kind of seasonality, so the forward sales guidance that tops out at $160 million is downright pessimistic.
The Street zeroed in on the low guidance rather than the unexpectedly strong results, and OmniVision dropped like a rock yesterday. Seeing that my assumptions about OmniVision's manufacturing pipeline were too harsh, and that computer makers like Dell
Is the next quarter's softness going to derail OmniVision's gravy train, or is it just a bump in the road? Feel free to share your opinion in the comments below.