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Updated from 5:01 p.m. EDT



delivered results ahead of Wall Street targets for its fiscal first quarter, but gave guidance sharply below consensus estimates, according to a release issued after the market closed Tuesday.

After the bell, shares tumbled $1.05, or 9.1%, to $10.52. In regular trading the stock lost 65 cents, or 5.3%, to $11.57.

The Sunnyvale, Calif.-based chipmaker posted sales of $98.8 million, more than double that of last year's levels and just ahead of the consensus estimate of $97.7 million. Revenue declined 1% from the prior quarter, however, reflecting lower demand for the company's outdated line of digital camera chips.

Net income totaled $19.9 million, up from $6.2 million a year ago but down slightly from the prior quarter's $20.8 million. Earnings per share clocked in at 32 cents, besting the consensus estimate by 2 cents.

Despite the drop-off in demand for digital camera silicon, Chief Executive Officer Shaw Hong said the company benefited from continued growth in shipments for camera phones. On the call, the company said camera phones grew to account for almost 80% of product revenue, up from 60% in the preceding quarter.

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Another 10% of sales in the just-reported quarter went to the security and surveillance systems market.

OmniVision also reported that second-quarter sales and earnings guidance will come in sharply below Wall Street expectations, however, reflecting its decision to reduce production and shipment of its CameraChip products. The chipmaker said it plans to ramp up production of a new digital camera-chip lineup known as OmniPixel in the October and January quarters. On a postclose conference call, executives acknowledged that until now, OmniVision hasn't had a new product for the digital camera market in a year.

The company guided for sales of $80 million to $90 million in its fiscal second quarter, well short of the consensus estimate for $102.8 million.

It said earnings should fall between 20 cents to 25 cents, also dramatically below the average analyst estimate for 32 cents in the period.

OmniVision added that revenue and earnings should increase sequentially in the third quarter ending Jan. 31, as it increases production of new products.

Notwithstanding the steep after-hours selloff, Vijay Rakesh of Next Generation Equity Research called the first-quarter results "overall, pretty positive." He attributed the guidance shortfall to a weak market for digital cameras and the product transition now under way at OmniVision. The company has been offering a product aimed at 3-megapixel cameras at a time consumers are shifting toward purchases of 4- to 5-megapixel models, he said.

More importantly, said Rakesh, were that the latest results should help allay worries that OmniVision might see share loss in its core handset business. On a sequential basis, the camera phone market actually increased as a percentage of sales to nearly 80%.

He has a buy rating on the stock; his firm doesn't do investment banking and he doesn't own any shares of OmniVision.