OmniVision Technologies, Inc. (OVTI)
F2Q2012 Earnings Conference Call
November 29, 2011, 17:00 p.m. ET
Mary McGowan - IR, Summit IR Group Inc.
Shaw Hong - CEO and President
Ray Cisneros - VP, Worldwide Sales
Hasan Gadjali - VP, Marketing and Business Development
Anson Chan - CFO and VP, Finance
Harsh Kumar - Morgan Keegan
Daniel Amir - Lazard Capital Markets
Brian Peterson - Raymond James
Paul Coster - JPMorgan
Betsy Van Hees - Wedbush Securities
Raji Gill - Needham & Company
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Ladies and gentlemen, thank you for standing by and welcome to the OmniVision Technologies Conference Call for the Second Quarter of Fiscal 2012. At this time all participants are in listen-only mode. Later we will open the call for your questions, instructions for queuing up will be provided at that time. As a reminder this conference call is being recorded for replay purposes.
I’d now like to turn the conference call over to Mary McGowan of the Summit IR Group. Please proceed.
Thank you very much. Good afternoon everyone and welcome to our fiscal 2012 second 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 products plans. This is based on information as of today, November 29, 2011, and actual results may differ materially from those set forth in such statements. These and other forward-looking statements involve assumptions, risks, and uncertainties that could cause actual results to differ materially. For a discussion of these risks factors, you should review the forward-looking disclosures in the earnings release we issued today as well as the risk factors from other disclosures in OmniVision’s SEC filings and reports, including most recent Annual Report on Form 10-K and recent quarterly report on Form 10-Q.
During today’s call we will also discuss certain GAAP and non-GAAP financial measures. The latter of which excludes stock-based compensation expenses and related tax effects. A reconciliation between the two is available on our earnings release posted on our website.
With that I’ll now turn the call over to Mr. Shaw Hong. Shaw?
Thank you, Mary, and welcome to all of you joining us on the call and webcast. Earlier this afternoon we issued the press release describing our results for the second fiscal quarter of 2012. For those who have not read the release I’ll provide you with a recap of our financial results.
In Q2, we recorded revenues of $218 million and we shipped 153 million image sensors. On non-GAAP basis, gross margin was 30.9%. And net income was $30.1 million for the exchange per dollar this year.
Before I turn the call over to our management team to provide details on our Q2 financial results and our outlook, I’d like to make a few brief comments. First, I’d like to express my disappointment in the results for our second fiscal quarter. However, from Q2, OmniVision posted a record revenues in four of its last five quarters. Our focus has always being on executing and technology leadership. The focus remains the heart and soul of the company.
Leading our second quarter, we encountered an unanticipated cutback in orders from major customers. For sensors that were designed into assist the conventional consumer devices. This event derailed our ability to deliver the financial performance that we had forecasted in August. However, despite its near-term setback, we are continued to deploy considerable resources to support the long-term growth opportunities available to the company.
Second, given the quarter we successfully concluded the acquisition of CameraCube production operations from VisEra. As you may recall, our CameraCube technology enables us to design our sensors and accompanying lens elements as an integrated unit that creates a refillable (inaudible) image sensor device.
CameraCube offers significant form factor advantages and down screen cost reductions solutions to our customers. We anticipate that this transaction will enable us to further streamline our operations and shorten our development cycle for CameraCube, effectively, realizing the full potential of this product line.
And finally, early this month, OmniVision’s Board of Directors authorized a stock repurchase program to repurchase up to $100 million of the company to outstanding common stock. While we acknowledge that a company’s near-term financial performance is disappointing. We strongly believe in the long-term strength of the company, our R&D efforts in CMOS sensors over the last 50 years have positioned the company as leading digital imaging solution providers in the world. This is (inaudible) accomplishment. Furthermore, the company’s lower product portfolio that touched image sensor from mobile phones to tablet and entertainment platforms to automobiles to security and surveillance to medical devices is second to none.
Several of these opportunities are longer term in nature also significant and sustainable. These factors continue to (inaudible) long-term confidence in OmniVision and lie at the heart of the decision for stock repurchase program. We also believe that the stock repurchase program is in the best interest of our stockholder and demonstrates our commitment to increase stockholder value.
With that I’ll turn the call over to Ray, who will provide an update on the quarter sales and activities. Ray?
Thank you, Shaw. Our execution felt short of expectations for our second quarter. This was brought about by a sudden cut back of orders from our largest end used customers of sensors. We also expect further degradation in demand for our third fiscal quarter. However, we believe our products and technologies offer high value solutions to the marketplace in our customers.