At the end of April this year, OmniVision Technologies, Inc. OVTI signed a definitive agreement to be acquired by a consortium of Hua Capital Management, CITIC Capital and GoldStone Investment. Under the agreement, the consortium will acquire all the outstanding shares of the company in a cash transaction worth $29.75 per share or a total of approximately $1.9 billion.
The stockholders voted in favor of the transaction and the company is going ahead with its plan to meet the closing conditions in the definitive agreement. It has received notice from the Committee on Foreign Investment in the United States stating that there are no unresolved national security concerns regarding the deal. However, all the necessary approvals are yet to be obtained.
OmniVision expects the acquisition to close in the third or fourth quarter of fiscal 2016.
Currently, OmniVision has a Zacks Rank #3 (Hold) which is subject to change following the latest earnings report. We have highlighted some of the key statistics from this report: –
Earnings: OmniVision reported second-quarter fiscal 2016 earnings per share of 23 cents, which comfortably beat the Zacks Consensus Estimate of 18 cents. However, earnings declined 24.04% sequentially and 50.85% year over year.
Revenues: OmniVision reported revenues of $343.1 million, up 4.0% sequentially but down 12.9% year over year. Revenues exceeded management’s guidance of $300.0–$330.0 million as well as the Zacks Consensus Estimate of $327.0 million.
Margins: OmniVision reported gross margin of 21.9%, down 72 basis points (bps) sequentially, and 8 bps year over year.
Operating margin of 4.5% was flat sequentially but down 302 bps year over year.
Net Profit/ Loss: Total net income for the second quarter of fiscal 2016 was $13.9 million or 23 cents per share compared with $18.2 million or 31 cents in the previous quarter and $28.0 million or 47 cents in the year-ago quarter.
Cash and investments: OmniVision ended the quarter with cash and investments balance of $613.5 million, an increase of $19.7 million from the previous quarter.
Guidance: For the third quarter, OmniVision expects revenues in the range of $310.0–$340.0 million. GAAP earnings per share are likely to be within 11–26 cents. Non-GAAP earnings, excluding share-based compensation and the associated tax impact, are likely to range between 24 cents and 39 cents.
OmniVision Technologies designs, develops and markets high performance, high-quality, cost-efficient semiconductor imaging devices for computing, communications and consumer electronics applications. The company's image sensors are used in cameras and camera-related products such as personal computer cameras, digital still cameras, personal digital assistant cameras and mobile phone cameras. The image sensors have been developed through the standard semiconductor manufacturing process used for modern integrated circuits.
Some better-ranked stocks in the technology sector are Stamps.com Inc. STMP, Travelport Worldwide Limited TVPT and Amazon.com Inc. AMZN. While Stamps.com and Travelport sport a Zacks Rank #1 (Strong Buy), Amazon has a Zacks Rank #2 (Buy).
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