OmniVision Too Nearsighted

The semiconductor sensor company misses on top and bottom lines.
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OmniVision Technologies

(OVTI)

late Thursday missed second-quarter earnings and sales estimates, and guided lower than the Street had forecast for the current period.

For the quarter ended Oct. 31, the semiconductor image sensor maker's earnings dropped precipitously to $5.4 million, or a dime a share, from $22.6 million or 41 cents, a year ago.

Excluding stock-based compensation and a one-time litigation settlement expense, OmniVision earned $15.9 million, or 28 cents a share, missing Wall Street estimates by 2 cents.

Revenue, however increased 8.6% to $137.7 million from $126.8 million in the same quarter a year ago. Analysts at Thomson First Call sought $139.82 million.

Shares of the Sunnyvale, Calif.-based company recently slid 5.3%, or 87 cents, after hours to $15.42.

Gross margins came in at 33.1%, compared with the 32.5% Street expectation.

The company largely attributed the decrease in gross margin to a "shift in product mix during the quarter to lower resolution VGA products and pricing pressure." (Video graphics array is an analog computer display standard.)

Additionally, compared with the prior quarter, inventory increased $35.2 million to $103.7 million, reflecting in part, planning for "higher unit volumes in the third quarter" and for the startup of its additional packaging capacity, and demand for VGA, "which came too late in the quarter to permit a change in wafer production schedules," the company said.

OmniVision forecasts third-quarter revenue in the range of $135 million to $145 million and earnings between 5 cents and 12 cents a share.

Excluding items, the company expects earnings to range from 16 cents to 23 cents a share.

On that basis, the forecast also falls short of analysts' third-quarter expectations of 33 cents a share on sales of $146.65 million.

Separately on Thursday, the company said that Chief Operating Officer James has joined the board of directors.