OmniVision Technologies, Inc (NASDAQ:OVTI) – the company with a vision
Mobile phones and tablets rule the communication roost today. Mobile applications, software and functionality that use to be relegated to cameras and computers are now accessed via mobile devices and companies that run businesses or manufacture products that revolve around these are having a heyday.
It goes without saying that investors will try to make hay while the sun shines. However, investing is not an easy game, even for the veterans. What is surprising is that shares in companies that were considered to be beneficiaries of the smartphone demand, are actually heading downhill. OVTI seems to be an exception and has been working past all the operational hurdles and is proving to be a better investing opportunity for investors who wish to bank-in on the mobile market growth trend.
Over the past few quarters, OmniVision Technologies did suffer from weak profit margins, high costs and an inventory build-up. Slowly but steadily it has managed to address costs, ramped up its unit sales and seen its profit margins rising. Inventory levels currently stand at triple that which they stood at in 2009-2011. But the company is shifting its weight and changing the way it’s playing its game. OmniVision is scaling production levels to make space for a larger market share. The strategy being that it will put short-term profits on the anvil to attain increased market share in the long-term.
Is OmniVision worth it?
Despite the potholes, you might actually see an upside in OVTI shares. This is primarily because of three factors. The mobile market is moving forth at a very fast pace and the company has been innovative and changed gears with its products as well. In the last quarter, OmniVision launched the OV88358 sensor. This sensor is one up over the OmniBSI-2 and OmniBSI+ pixel architecture and has a 20 percent improved performance in low-light conditions. Secondly, the company shipped 50 percent more units in this quarter in comparison to the last one. Also, from 2005-2011, the demand for CMOS image sensors rose by 44 percent, compounded on an annual basis. Since 2010, a rise in the demand for tablets accounted for 63 percent compounded annual growth rate for the company. All-in-all, it seems like OmniVision has brought its act together and the market currents are also adding wind to its sails.