Unfortunately my thoughts are pretty bearish in the short term. I'm very concerned about the iPhone teardowns expected in just 16 days. (E.g. Take a look at the sharp fall Omnivision had in November 2011 when it lost out on being the exclusive iPhone image sensor leading to a civil complaint due to management's comments implicating the opposite.)
As for my specific concerns...
First, while Maxim was the most recent analyst to meet with management and claimed INVN was highly likely in the 5s, their poor track record and poor logic make this suspect. In June, Maxim thought we were shut out of the iPhone but now because we are not in the 5c then we are highly likely in the 5s? It appears to be a complete guess.
Second, the analysts who met with INVN before Maxim were Oppenheimer and Pacific Crest. They appear to have based their opinions on comments from meeting with INVN management in Vail. Pacific Crest's comments about negotiations being hung up on margins and INVN not guiding for any Apple business and Oppenheimer's take that we are not in the iPhones does not bode well.
Third, when was the last "checks" based positive note on us likely being in the iPhones? Wedge, Goldman Sachs, OTR Global, where are you?
Fourth, INVN's "pleasantly surprised" comment on the last CC now looks to me like they weren't necessarily talking about Apple. The question was about Apple, but the statement actually seems like it might have been more about specifics in general, meaning specifics of any design win need to be shown by a teardown. Plus, the guidance seems low for an Apple deal.
On another note, my research suggested to me that we are probably in Moto X as we are likely part of the TI sensor board used. (Not finding the research at the moment.) If that proves not to be case and we lost iPhones and Moto X, then my concerns would be greater.
Yo Rzkeller!!! You've become the "go-to-guy" with INVN!!! I think you're spot on in many ways regarding your INVN assessment. While it's ok to be optimistic, it's very important to be neutral when doing your due diligence and sometimes your research leads to a pessimistic view in the end. Your "GUIDANCE seems LOW for an Apple deal" comment is a fact. I give it a low percentage chance that INVN won any of the IPHONE contracts at this point. It just doesn't add up. Timing and low guidance says no iPhone but it doesn't mean no iPad 5/iPad Mini ... and a decent percentage chance it's in the iWatch. But the big unit shipments would have been the iPhones. I think the "pleasantly surprised" comment was regarding the Samsung Gear/Watch and/or Apple iWatch ... maybe the SonyPlaystation 4 controller. I dunno for sure but who will be pleasantly surprised right now by an iPhone win? Pleasantly surprised points to something that's not the usual gadget and/or usual suspect. According to recent reports, the iPad will enter mass production in Q4, with initial production entering some time this month so I think it's reasonable to conclude that the guidance *could* have included some Apple related shipments. Only time will tell. I understand your short term concern regarding INVN, I'm with you regarding this. I am however *pleasantly surprised* by all the hype and hoopla surrounding the Samsung gear/Apple iWatch and other smartwatch products in the near future. I can see how every other manufacturer will sprint to produce their version of the watch. And this time ... INVN's chip size and low power gyros will be the difference between winning and losing these contracts. growth.
Thank you, RZ. As always a lively thought provoking conversation when you contribute. I can't disagree with anything you have stated, other than guidance seeming low for an Apple deal. I thought there was a consensus that due to Apple's privacy clauses their business would not have been included in INVN's guidance. I cannot believe that INVN would double their manufacturing capacity on a hope or wish. The addition of a new director whose bailiwick is "explosive" growing companies bodes positively. When put together this certainly gives the appearance of a company readying itself for dramatic expansion. If indeed Apple is the company that Gus Richard was referring to back in Feb, one would think a deal was already in place. But to hear six months later that they are still haggling on price is, of course, a matter of concern and a lot to weigh, indeed. Still, I find myself more in the Cody camp. I think it is clear from STM's call that they lost Apple. And I too am willing to ride this out because the payoff is potentially so rewarding, not to mention greater than the downside should it not materialize. Thanks again, Cody. Time will tell.
I’m not worried per se, as I’m pretty sure we’re in either the Iphone or Ipad.
Shares of Omnivision ramped 68% in the six months post iPhone 4 release, but declined 57% in the three months before the 4S launch due to concerns about share loss. Invensense was never in Apple, so if we don’t get Apple in some form (I think highly unlikely) then the decline wouldn’t be as severe as Omnivision’s.
Gus Richard, senior research analyst at Piper Jaffray, says in the IBD New America Feb 2013….. "And I would note that a large new customer has requested that they double the capacity. They are increasing their internal test capacity quite substantially. So it's one thing to ask a potential vendor to be ready to increase output significantly. It's quite another to go out and spend capital and buy and build test systems to be ready for that volume."
One other thing, since STM has reported earnings not too long ago, they have dropped from 9.79 to 8.23 (drop of - 15.93%). Is this because they lost share of Iphone ? During the STM CC, Francois Meunier of Morgan Stanley, Research Division asked “where the sudden pricing pressure coming? Is it because of the high-end smartphone market is not so glamorous, as you would say? Or is it because there is a risk of being dual soft at Apple with InvenSense”? STM CEO Carlo Bozotti said, “We are working very hard to be less dependent on major customers. I mean, we are really making great progress at many other smartphone customers, particularly in China, where we have a very strong position”.
To me, myself, and I, that sounds like they lost Apple.
I’m willing to ride it out because if we are in the Iphone and then Apple gets China Mobile, then we are off to the races.