Friday, June 01, 2012

Omnivision Reports Quarterly Results, Promises New "Watershed" Applications

Reuters: OmniVision reported a quarterly profit that missed Wall Street expectations and forecast weak earnings for the current quarter, as inventory write-downs dented its gross margins. OmniVision's net income for the quarter was $2.7 million, or 5 cents per share, compared with $34 million, or 56 cents a share, a year earlier. Revenue fell 15 percent to $218.5 million. Analysts expected earnings of 22 cents a share, on revenue of $205.4 million. Gross margin for the fourth quarter fell to 22.5%, from 30.7% a year earlier.

The company expects next quarter revenue of $235M to $255M, while analysts are expecting $219.2M.

SeekingAlpha earnings call transcript gives more details:

Shaw Hong, CEO:

"...there are challenges face OmniVision in the near term, specifically our corporate gross margin is under pressure. We have already launched multiple programs to improve our performance. These actions range from more aggressive development in integrated imaging solutions to more vigorously efforts to increase production yield. These measures may take time to produce favorable results, but we are committed to once again expanding our gross margins."

"...we are currently a leader in the mobile phone market, especially in the smartphone product category, and have had considerable success in the notebook and the entertainment market, our ongoing objective is to diversify our revenue stream into other promising markets. (inaudible) we see more opportunities in the automotive and medical markets."

Anson Chan, CFO:

"BSI-2 devices being such a complicated sensor on cost structure, it's actually very high at the moment. This is something that we have to battle, and obviously we are doing everything we can just that we won't be able to fix it immediately."

"I won't say it's all because of yield though, it's simply because the part is complicated and so there are a lot of effecting steps involved. And our whole supply chain also, they have new equipment and whatnot."

Q&A session had some tough questions:

Betsy Van Hees – Wedbush Securities:

"...if I remember correctly last summer, and you guys were talking about BSI-2 and talking about your expertise in being able to resolve problems quickly, and here we are today and we’re talking about -- and Anson I thought I remember you having [the caveat] here about the concerns that you have in terms of yield losses as you’re producing these products. So I was wondering if you could talk about what’s different between last summer and this summer."

Anson Chan, CFO:

"...the BSI-2 device that we were dealing with last summer, it's not even the same device that we’re dealing with today. So, you are going to have design changes, you are going to have layout issues, production steps that are all a little different, and all these little differences that add up to a new process overall for our supply chain."

Paul Coster – JPMorgan:

"...we’re all pretty confused here. It sounds to me like there’s something structurally different about these new products from BSI-2 in terms of the supply chain that cannot be fixed by you."

Anson Chan, CFO:

"It is fundamentally different, because this is 12-inch versus 8-inch, so our entire supply chain, they have to -- particularly when this time when we have to increase capacity upon -- to bring in new equipment. So, everyone has to go through the whole depreciation process and so forth and recover all the investment."

And then there is a teaser about a new watershed application area:

Ray Cisneros, VP of Worldwide sales:

"Other novel products using OmniVision sensors will soon be launched into the marketplace. Some of these designs represent a watershed point in how image sensors are used. Capturing an image is not the only application for a CMOS image sensor, and future tier 1 OEMs will demonstrate that in upcoming quarters."

2 comments:

  1. Unbelievable, the stock price of OV slided 20% after this quarterly report. Agreed, the news is not exciting, but really? 20% down overnight?

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  2. The truth is the overall performance (pixel, noise, bondability...) of OV's BSI-2 is much worse than Sony's BSI for 8MP or higher resolution sensors. That's why OV did not win any important projects for their BSI-2 8+MP(ex. iphone4s rear camera project). However, they already invested a lot on BSI-2 process and yield improvement, it cost a lot and no return, also caused huge inventory left which almost cannot sell to anyone (come on! who wants to buy?)

    Moreover, the cost of 12 inch wafer is 3~4 time than 8 inch, not mention longer cycle time. This also causes the margin lower other than low yield problem.

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