Sometimes where there's smoke there's fire. Imaging chip developer OmniVision Technologies (Nasdaq:OVTI) has been an uncommonly controversial stock for most of its history, with recent worries focusing on whether the company was facing share loss to Sony (NYSE:SNE) and Toshiba at Apple (Nasdaq:AAPL). Now that the company has given very disappointing guidance for the next quarter, those worries have ratcheted up to a fever pitch. OmniVision shares are almost certain to be punished too far, but it will take a patient and aggressive investor to step up and fight the tide.
A Few Blurry Spots in First Quarter Results
Although OmniVision met expectations for the first quarter (and earnings actually beat by a bit), it wasn't a uniformly clean quarter. Revenue did jump 43% from last year's level, with sequential growth coming in at 7%. Shipments climbed about 1% sequentially, with ASPs up about 5%. Given that laptop/notebook computer shipments haven't been all that strong, it seems fair to assume that OmniVision's growth is coming from other product categories like phones, tablets and gaming devices.
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