Sunday, January 07, 2007

Robert W. Baird on Omnivision

The parade of negative investment opinions on Omnivision goes on: Notable Calls cites Baird with plenty of negatives, following their checks that suggest 2007 could prove to be a very difficult year for the company.

Omnivision's gross margin is set to fall significantly over the next few quarters, in firm's view. Their checks indicate TSMC's gross margin on sales to Omnivision are approximately 40%, and estimate there should a 20% differential between Omnivision's gross margin and that of a fabbed competitor such as Micron. At 20% gross margin, Omnivision would lose money.

Per firm's checks, pricing is dismal: as low as $0.70 for VGA sensors, $2.50 for VGA modules. Omnivision no longer benefits from the tight supply environment of 2006, and excess capacity should bring pricing further down in 2007.

Samsung is now the second-largest supplier of CMOS image sensors. For 2007, Samsung is targeting the lower end of the mobile phone market - Omnivision's last stronghold. Micron's recent acquisition of Avago Technologies represents further bad news for Omnivision, as it will enable Micron to target sub-1mp CMOS image sensor markets which the company so far had ignored - targeting two-third of Omnivision's current revenues.

Omnivision missed two product cycles (1.3mp and 2mp) and is not gaining meaningful traction at 2 and 3mp resolutions, per firm's checks. WaveFront Coding Technology does not work and is currently experiencing "serious technology issues," per firm's checks.

Yahoo-Finance quotes Notable Calls article too.

I'm wondering where is Omnivision's Howard Rhodes with his magical abilities in pixel design?

4 comments:

  1. Magical....surely you jest. There was a reason he left Micron.

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  2. Many image sensor people left Micron recently... for one reason or another. I assumed Howard is familiar with all the black magic of pixel design. Might be a mistake on my side, but a sheer number of his patents is very impressive.

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  3. Sorry, there are specific examples which should not be shared in a public forum. And, for all we know, you ARE Howard Rhodes. Wait, not possible, this blog is too insightful....

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  4. Interesting. So, who is the chief wizard of pixels at Micron? There is just a handful of people who used to sign Micron pixel papers. And most of them are not with Micron anymore. And Micron pixel leadership is not so apparent like it used to be just a year ago... Not that I'm trying to defend poor Howard, it's more just my random thoughts on the matter.

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