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OmniVision Technologies, Inc. Message Board

  • omnifocus321 omnifocus321 Jun 23, 2006 10:47 AM Flag

    Investors' perception of OVTI

    Yesterday I had a chance to chat with a friend's friend who is an analyst for a hedge fund. I asked him why did OVTI share fell so much in spite of solid results and guidance. He told me the general perception investment community has about OVTI is that the management never articulates well about its declining average selling price and margin issues. They felt they never got answers from the CFO that fully address their concerns on competitive landscape and impacts on future margins. A joke he made was that if OVTI changes the CFO, share price would jump by at least 10% right away.

    Not sure if his view is representative of majority of institutional investors. But clearly a very important function of any CFO is to communicate the company's value to investors. And unfortunately I have to agree that OVTI is failing in this department, even though OVTI obviously has fantastic R&D and sales teams. Best example of this is from the latest CC, when management could have more thoroughly explained reasons behind falling ASP and margins, not to mention the confusion/concerns about rising sales from China. If Peter Leigh was astute as other CFOs, hedgies and herb the thug will have less room to inflict severe damages on the share prices.

    I sincerely hope Hong and Wu should seriously think about restructuring its IR team so that OVTI's value can be clearly communicated to the investment community.

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    • I agree OVTI is very much undervalued considering its current performance, financial condition and its current business environment. That is why mangement should play a strong PR role. Sun does not shine always. So make hay while it does. If it cannot make P/E 20 or 30 now, when can it do? The invstors on MSFT, INTC, ORCL, SUNW or CSCO made money during the hay days but all the long term investors lost money. So Hong should maximize the shareholder value now. Tomorrow is coming tomorrow and do tomorrow's work tomorrow.

    • My comments on forecasting were related to forecasting revenue and earnings, not price on any given day. If some suitable smoothing statistic such as 50 day, 100 day or longer moving or weighted average is used, there is ultimately a pretty good correlation between fundamentals and this statistic. Everything else is variance, and may very well be accounted for by some of the factors you mentioned. While a high beta stock may be more gut wrenching to hold, the high beta certainly does allow for attractive entry and exit points, and higher beta stocks do, in general, afford a greater long term return. I watch these extreme price movements more out of curiosity than fear or greed. The danger, I expect for many retail investors is that they really don�t understand the companies they own, and so react to price movements as if they were proxies for company performance. For companies with a high beta, most of these price movements are not good proxies for performance, so long term investors need know how to identify this form of volatility for it is, and learn to react to it with their head and not their gut.

    • farsense, you seem to be an intelligent and analitical investor. If you have studied OVTI you will know that in spite of the 90% institutional ownership the stock (and the beta) are subject over the last several years to being in play by some very large players. It is easily moved largely because the normal daily volume of around 1 million shares is composed of very small retail investors. If you place an order, buy or sell for say 5000 shares in a non news, non CC reactive period your order will be filled with 20/30 transactions. The large short players have found this an easy mark. Easy to drive pps down to levels where the small longs fear wipe out. Easy to cover before the good news comes. All the rational investing practices, t/a,dd.charting,etc. cant overcome those basic instincts of fear and greed. The company management is better than most of this capitalization, performance in a competive space is augmented by huge r & d to keep a step ahead, which they have. Yet, still battered by, yes, fear and greed. The analysts and Herb,etc. could never pull this off on AMD, Intel, Microsft etc. They can and do here.

    • and yet they keep coming back to the trough...only in small caps can these buffoons gat away with this kind of "analysis." Imagine if they tried the same crap on visible large cap stocks, GE, etc.... Their career would be over the next day, no severance pay....Welcome to small cap world. I've learned lots the past 2 years following this stock. JMO

    • herb has played his hand, and is recognised by the entire investment community as having an axe to grind re sum it up, he has no credibility on this subject, and seems to have been can fool some of the people some of the time......and you are correct re anal-ists choosing not to believe management.....gerra and benjamin have been in this position before, only to be proven wrong most emphaticly.....

    • re: It's easiest to throw out nothing and take the numbers that are reality.

      Sure that is easier, but does it lead to better forecasting? When a company turns a major corner with new products and markedly improved results, from a forecasting point of view, it seems to me to make more sense to incorporate that knowledge in the forecast, rather than to do simple year over year comparisons ignoring �facts on the factory floor�. If forecasting were as simple as drawing splines connecting data points, we would all be able to predict the future. But considering the caliber of your posts, I know you don�t believe that. While I do use year over year and quarter over quarter comparisons, those statistics by themselves are rather weak predictors. A better forecast selects the data points based on company events rather than data points selected on the basis of arbitrary reporting requirements.

      I do agree with you about the role of management�they should be involved in running the company, not the stock market. In the long run, company fundamentals will speak for themselves. Stock buybacks are legitimate interventions if done for the right reason�to increase the value of the company, not the price of the stock that day. I thought management spoke quite clearly on the last conference call, but certain analysts just decided not to believe them. I am not sure how management could be more forthcoming without giving up too much strategic information. Herb is just too entrenched in his position, and would not back down anymore than your favorite congressman would back down from some position he took. No one wants to say �you were right, and I was wrong�.

    • seustis,

      I wanted to say what you just said for a long time but could not articulate it as well or did not have time to do it as well as you did. Thank you!!! Please keep posting the arguments that the true investors (not traders) would appreciate.


    • excellent!!!!!!!!!!!!!!

    • "You still don't get it. P/E is not the result of performance but it is the result of the impression the company projects."

      No, I get it precisely. And precisely what I get is (1) that OVTI's P/E multiple is ridiculously low given it's historical performance and forward guidance, (2) that OVTI has strong management paying attention to running the business and not to hyping their stock, (3) that CEOs who focus on short term P/E multiples usually come a cropper anyway, and (4) that fundamentals ALWAYS win in the end. Of course, as an experienced investor I do try to time my trades and play the swings a bit, but far less than most of the folks I encounter on message boards, and in the end I would NEVER bet against a severely undervalued growth company with a strong CEO, a big pile of cash, and a kick-ass product line.

      What I don't get is the number of short attention span thinkers in the market these days -- folks who, like you, seem almost totally focussed on short term returns. You have either forgotten what makes a company's stock worth owning in the first place, or perhaps you never learned it, or perhaps patience is just not seen as a virtue in the market any more -- which is maybe not too surprising, given that we can all trade $50,000 blocks of stock for a $10 internet comission, and locking in a profit today or this week seems sooo easy if we just get a little bit lucky and guess right. Duh!

      You didn't even understand the point I was making, as evidenced by your response (probably because you were reading too fast for it to even register.) And on the very day Warren Buffet announced his $40 BILLION charitable contribution package to boot!

      So I get it just fine, but do you?

    • Exactly,

      Big difference between income from operations and earnings. I am glad that it was only 4(3.66)% because the it tells me that OVTI is concentrating not on the qtr to qtr or even yoy.
      OVTI could have made the bottom bottom line look even better if they had not spent 15M more on R&D, 6M more on SGA, and felt confident enough to go long on their investment. But they would not have the future that they are going to have very shortly.

      This dog is going to hunt soon. OVTI is a lean,mean, green machine that not even the axxholes on WS can stop.

      Long,strong, Hong

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