OmniVision Technologies, Inc. (OVTI)

F1Q 2012 Earnings Conference Call

August 25, 2011 17:00 ET

Executives

Mary McGowan – Investor Relations

Shaw Hong – President and Chief Executive Officer

Ray Cisneros – Vice President, Worldwide Sales

Hasan Gadjali – Vice President of Worldwide Marketing and Business Development

Anson Chan – Chief Financial Officer

Analysts

Daniel Amir – Lazard Capital Markets

Raji Gill – Needham & Company

Srini Sundararajan – Oppenheimer

Brian Peterson – Raymond James

Betsy Van Hees – Wedbush Securities

Presentation

Operator

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Ladies and gentlemen, thank you for standing by and welcome to the OmniVision Technologies Conference Call for First Quarter of Fiscal 2012. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions for queuing up will be provided at that time. As a reminder, this conference call is being recorded for replay purposes.

I would now like to turn the conference call over to Mary McGowan. Please proceed.

Mary McGowan – Investor Relations

Good afternoon, everyone, and welcome to our fiscal 2012 first quarter earnings conference call. On today’s call will be Shaw Hong, President and CEO; Ray Cisneros, VP of Worldwide Sales; Hasan Gadjali, VP of Worldwide Marketing and Business Development; and Anson Chan, Chief Financial Officer.

During this conference call, we may make forward-looking statements regarding our business, including statements relating to revenues, earnings targets, and our product plans. This is based on information as of today, August 25, 2011. These and other forward-looking statements involve assumptions, risks, and uncertainties that could cause actual results to differ materially. For a discussion of these risk factors, you should review the forward-looking disclosures in the earnings release we issued today, as well as OmniVision’s SEC filings.

During today’s call, we’ll also discuss certain GAAP and non-GAAP financial measures, the latter of which exclude stock-based compensation expenses and related tax effects. A reconciliation between the two is available in our earnings release posted on our website.

With that, I’ll now turn the call over to Mr. Shaw Hong. Shaw?

Shaw Hong – President and Chief Executive Officer

Thank you, Mary, and welcome to all of you joining us on the call and webcast. Earlier this afternoon, we issued a press release describing our results for the first fiscal quarter of 2012. For those who have not read the release, I am pleased to provide you with the recap of our financial results.

In Q1, we achieved record quarterly revenue of $276 million and we shipped over 170 million image sensors. On a non-GAAP basis, gross margin was 31.8% and net income was $47.2 million or $0.76 per diluted share. In addition, we maintained a very strong balance sheet with a cash position of $560 million.

I like to share with you on other financial metrics before proceeding. On a rolling 12-month basis, I am pleased to report that OmniVision has topped the $1 billion market in total revenues. Our first fiscal quarter result is the third consecutive quarter showing this movement. This is record breaking for OmniVision. I firmly believe the seamless teamwork among our employees and with our supply chain partners in executing our strategies result in the success. We are focused and committed in making this happen. We have been investing in developing leading technologies producing a growth portfolio of products for various applications and markets, and serving and supporting our customers well worldwide.

Moving forward, we intend to reach the next level of growth by building upon these fundamental competences that I just mentioned, with additional focus on expanding our strategies to imaging sensors to providing system level solution to our customers. We believe there are many directions for strategic growth that are highly complementary to our core companies. We see potential growth through the high channel of creating end use. This means the technology is related to the input, the capture, the processing, and the output of the light and color to produce an image on all fields that could lead to new products in the market for OmniVision. This can lead to opportunities in the field of optic sensors, outside visible spectrum, image data processing, data interface chip, and the system solutions. The enormous growth of imaging solutions in mature and new markets directs OmniVision to look at broadening our technology and the products.

So now, I will review three key topics that are fundamental to achieving our future growth. First, an update on our technology strategy; second, some comments on expanding technology and meeting customers’ needs; lastly, an update on products in our key market strategies. As usual, on my each of these topics, these are key focus on execution. It is a commitment that we take seriously as we pursue success on a daily basis.

Let me start with technology. OmniVision’s strategic direction is based on the principles of disciplined investment in emerging technologies. We invest in our core competencies to meet the needs of promising new markets, along with increasing sophistication of the consumer. Our advancement in technology development produces sensors with increasingly low power consumption and higher performances. One excellent example is our proprietary BSI technology. This technology is the key enabler behind our leading imaging sensing solutions for the industry. With the best combination of low-light image capture, with excellent color reproduction, brightness, and overall clarity, our BSI image sensors are adopted by OEM all over the world for many different applications.

Our investment in technology development expands beyond image sensors and into providing system level solutions. We have been evaluating technologies that are highly complementary to our core business of imaging sensor solutions. We have a team of specialists focusing on specific applications such as hardware, software, system developments, optics, and transitional modules in the key markets.

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