Updated from 8:38 a.m. EDT

The drubbing in

OmniVision

(OVTI)

is particularly bitter for shareholders who held on to their stakes while company brass was recently doing the opposite.

A mini-revival in shares of the camera-on-a-chip company ended Wednesday after the company said internal and independent investigations have been looking into its accounting practices. OmniVision also guided down estimates for its current period.

The Sunnyvale, Calif., company is weighing a restatement that would affect this year and last after it found revenue-timing issues. The net impact is likely to be a $5 million increase in revenue over the first nine months of fiscal 2004, and possibly higher earnings, too.

That didn't comfort investors, who sold the stock down $7.74, or 30%, to $17.73, below the level at which they traded in late May and well below the $29 reached after the company reported a tripling in third-quarter earnings thanks to brisk demand from cell-phone makers.

News the company was looking at a restatement took the luster off news OmniVision expects to meet or exceed fourth-quarter guidance for earnings of 30 cents to 31 cents a share and revenue of $96 million to $100 million. The company expects a similar result in its fiscal first quarter, which would fall short of estimates for that period.

Fourth-quarter earnings, which were supposed to be released Wednesday, will be released June 23.

Though OmniVision proved to be a big

Nasdaq

winner in 2003, with a stock gain of 280% for the year, the ranks of skeptics started to grow this year.

The runaway success of camera phones caught the interest of big competitors, and many industry watchers soon predicted an end to OmniVision's days of dominance. Outfits like

Micron

(MU) - Get Report

,

Agilent

(A) - Get Report

and

STMicroelectronics

(STM) - Get Report

have introduced camera chips for phones, and giants like

Texas Instruments

(TXN) - Get Report

and

Agere

could easily move in as well.

That so-called bear case wasn't hurt by the apparent eagerness of OmniVision executives to cash out some of their holdings recently. In one three-week period in March, seven top executives sold $11.1 million worth of OmniVision shares.

The sudden revelation that the current quarter is lighter than Wall Street's expectations and that the books are now under review, after a heavy insider selling period, may raise some eyebrows among regulators.