Omnivision Reports Quarterly Earnings

PR Newswire: Omnivision reports quarterly results for its last financial quarter ended on July 31, 2013. Revenues for the quarter were $373.7M, as compared to $336.2M in the previous quarter, and $258.1M a year ago. GAAP net income was $23.1M, as compared to $8.9M in the previous quarter, and $2.3M a year ago.

GAAP gross margin for the quarter was 17.4%, as compared to 17.5% for the previous quarter and 19.1% a year ago. The sequential decrease in gross margin reflected an increase in allowance for excess and obsolete inventories, partially offset by incremental production cost improvements. The company ended the period with cash, cash equivalents and short-term investments totaling $240.5M, an increase of $28.2M from the previous quarter.

The Company expects revenues for the next quarter to be in the range of $375M to $410M.

"...we are excited to report strong sequential revenue growth in spite of a slowdown in the smartphone market during the second half of the quarter. Nonetheless, as competition intensified in response to the market slowdown, the forecasts for some of our products were negatively affected and we did not see a sequential improvement in gross margin," said Shaw Hong, CEO of OmniVision. "We continue to pursue cost reductions across our supply chain, and market diversifications into potential growth areas such as automotive."

Update: SeekingAlpha published Omnivision's earnings call transcript. One of the Q&As is about the competition in China:

Harsh Kumar - Stephens:

I would have expected given the scale that you would have a better cost of manufacturing sensors relative to the smaller Chinese competition or companies. So I'm a little surprised that that they are able to put pressure on your margins maybe you could just clarify for us how they are able to put pressure on your margins despite your scale?

Anson Chan, CFO:

We are not exactly saying that in some of the lower cost competitors in the market are putting pressure on the margin per se. Most of the margin issues for this quarter in particular based on the prepared remarks, it’s coming from increase in our own recording of excess charge for inventories, as suppose to ASP type pressure. Albeit the pressure is there, right. So I would have to say that that there is not so much pressure from in this low cost manufacturer, the cost a detriment to the gross margin.