Does anyone have access to either of these reports? I try to follow analyst estimates b/c they tend to get to the same #'s over time. I haven't seen any estimates decreased since the last two negative reports came out. Seems like estimates would be coming down if the analyst community believed these reports. Also, seems like quite a leap to estimate potential 100% loss of business for something that hasn't hit the market narrative. Did Bosch lose its Apple slot last year when they had their issue with the iphone 5 - nope, and that was a pretty big deal. Surprised this news had such limited impact - seems like the bottom is near b/c the Apple business is very important for their growth and diversification story.
1) saying a leading smartphone marker could be switching to a dual-sourcing strategy for certain components, including gyroscopes - who are we talking about here?
Apple? - not unless INVN is gating current production. If that were the case we'd hear about this from other analysts and Gerra would have reduced estimates;
Samsung? - there was 0 hint of losing market share with Samsung in the last CC, and basically said any inventory adjustments, i.e., slow downs with Samsung would be made up with other content gains - perhaps OIS or audio business.
Xiaomi? - which is well chronicled as having given STM the last gyro socket. I think INVN will win OIS with Xiaomi somewhat offsetting the gyro loss, which even as a 10% customer last qtr, brought in just under $7m in sales for INVN.
2) Baird also believes competitor STMicroelectronics (STM) could be gaining market share at other smartphone makers...
- So Xiaomi's loss for INVN is STM's gain, but if INVN wins an OIS slot w/ Xiaomi and takes most all of STM's Apple biz how is that a negative? Plus I am under the impression that INVN will have a separate 10% customer from China that would basically replace Xiaomi this qtr.
One has to imagine that STM has lowered prices a ton to get one of the big boys enagegd in the near term so they don't have so much idle capacity.
No doubt INVN needs to be executing across the board to maintain their market share, but there is no evidence that INVN has been caught on a performance basis by STM or Bosch. INVN may in fact be ok to lose mkt share if it is not favorable to the bottom line. If STM wants to lose money to take back mkt share let them. The Apple business will fund INVN's desires in audio, navigation, wearables, & further sftw integration over the next years. Unless est's get slashed, the analysts can adjust their price targets all they want. Thus far only one analyst has adjusted est's since last wk and they were up. Market willing - this is a great price.
In the last twelve months Samsung has sold roughly 320m smartphones (based on IDC reports through calendar Q2). In that time frame INVN's revenue with Samsung has been roughly $95M.
In the last twelve months Apple has sold roughly 160m smartphones (based on IDC reports through calendar Q2).
With its latest product cycle, the assumption that this will sell well in China - I've seen expectations of selling 250m - 300m in the next year. I'm guessing that adds roughly $75-90m in sales for INVN in the next 12 months.
Only one analyst's estimate changed last week per Yahoo (for INVN) and the ave sales for this FY are currently 367m (45% growth) with next year at 465m (27% growth). I'm curious if the analysts figures expected what we know thus far. Remember, INVN was projecting annual sales of 315-340m w/o the Apple win, which will only benefit them for roughly 8 months this FY.
If we can hold the sales we now have, execute on margins, add an iwatch, an ipad, see some microphone sales, additional OIS sales, drones, virtual reality, and other 7 axis related products, the estimate for FY2016 may well be quite low. That said, we won't grow 45% YOY (in FY15) and keep a forward looking PE of 21 (based on current FY16 earnings).
It probably won't happen for a while, but I suspect the stock hits the $40s by this time next year.
Depends on volume, but I'm, guessing 0.75 to 1.25. You could probably use 1.00 for your calculation. Each is probably worth 0.20 of net income.
Just an article mentioning that analysts projected Invensense beating out STM for the motion sensing chips in the new iphones. Nothing new, but I suspect in a qtr or two INVN will be well known in IBD again.
So very glad to be wrong about the 3 axis gyro - even ifixit got it wrong initially (calling it a 3 axis unit in the 6+). Still be interested to hear more in the CC about pricing and margins on units in Apple specifically. We were told that the inventory build was not directly for the new NA customer so the fact that we won with the 3rd generation 6 axis unit should not be a surprise. We were given hints that this maybe a stripped down hardware version only vs a more software laiden product, the kind that generates higher margins. We were also told that some customers may not want a dedicated 2 axis gyro to run OIS, and perhaps that is the case here as well. Haven't heard anything about the microphones, which maybe a less sexy component, but an important one to INVN followers all the same. Time to enjoy stock price increase, earning projection increases, and shorts decreasing. Stll curious on what the 3 axis build was to be for in Q3 and what Chinese customer may have become a 10% customer this qtr. The Apple news may make it harder for there to be a new 10% customer in China though, as I suspect our Apple revenue this qtr will be much higher than projected.
For those long there is zero reason to sell any time soon. We have atleast 4 quarters of easy qtrly earnings comparisons after this qtr. I have never understood the short case and am excited to see how long it takes them to close out those positions. I can understand concerns with dilution and margin compression, but for now we will have some certainty behind revenue growth and earnings. I think next year's earnings estimates will go much higher from here, and the stock will look reasonably priced in the 40's soon enough.
I have no clue what we'll see, if anything, on Friday. Remember how the M7 was so difficult to identify last time. Quite possibly we have the same issue with the M8, plus I get the sense that the OIS will be managed by the 6 axis gyro vs a dedicated 2 axis unit. So here is my projection:
iphone 6 will include a 3 axis gyro only - replacing bosch
iphone 6+ will include a 3rd generation 6 axis product that drives OIS
No idea if any content from the mic business will be won, but I would doubt it
Hopeful that the watch could go to production with the 7 axis product for early next year, but Apple doesn't strike me as a company that will be 1st to market with the newer technology and perhaps the 7 axis will just be ready for the product cycle a year from now
My next curiousity is who the potential 10% customer from China would be. I sense we lost a gyro to STM with Xiaomi, but potentially gained an OIS socket win with them. That said - who would this 10% customer be, that is China based and a new customer...we already have worked with Lenovo, ZTE, Oppo, and Huawei in the past. Is Coolpad new?
Analysts have revenue growing 34% sequentially this qtr and 27% the next qtr and I'm thinking that maybe too low. Glad to see shorts are sticking to their position - you can buy my shares at 40+.
Remember that INVN stated their inventory buildup wasn't for the new customer (directly), but on units already in the market as they were clearing the way for the new production needed to meet needs of the new customers and products. New customer was to be receiving newer generation product - which I'd love to include mic as well as multiple gyro wins (OIS as well as base motion sensing).
I don't believe the ASP or margin for that matter will be that much different for OIS vs any other component for INVN. Also, keep in mind that Apple may not use a dedicated 2 axis OIS unit. The CC made it sound like a 6 axis gyro could be used as OIS for some customers. Also, this is Apple, INVN will be squeezed on price regardless of the unit. Incremental $'s from OIS will be 10's of millions of dollars, which is awesome, but not 100's of millions.
That scenario may happen, but the golden goose is sole supplier of the iphone6 gyro and/or ois. If iwatch is delayed it just allows for another growth avenue later. The chances INVN is inside the watch/band product is quite high and that won't change with time. The forward PE to growth rate on INVN is actually quite favorable. They just need to execute on growth plans and margins for this stock price to shoot up.
A few thoughts. Google is not a new customer, neither is Lenovo, but perhaps they would consider Motorola a new customer. They will not be the 10% customer in the US, but they maybe a new one. I know they said there would be multiple new US based customers.
Apple is clearly one. This shouldn't even be a question any longer. It will be a week or two before we see the teardown and we may not "see" anything but OIS, since the gyro last time was part of the sensor hub that was not visible. Simply look at all the estimates from the "analysts". The #'s clearly show that Apple has to be here. You could add up Blackberry, Motorola, and Google whatever and not get to the estimates being shown w/o Apple. I'm happy to get them all.
Glad stock went down last week. I'm completely back in and think it doesn't see these levels again - ever. Time to make that invnnaire name mean something. Good luck.
A few add'l notes:
- iphone 5s came out 9/10/13 and the ifixit teardown happened on 9/19/13. We may get lucky and find out about OIS at the 9/9 event this year, or perhaps they'll discuss how the iphone and iwatch would work together, otherwise expect a teardown about 1.5 weeks after the announcement.
- A week before the Apple event we should also hear about two major Android launches in the Galaxy Note 4 and Moto X+1. Rumors have OIS in both. Motorola has evaded INVN in the past, but it would be nice to get further diversification. Not sure if that would be considered a US company (Motorola/Google) or Chinese (Lenovo).
- Apple is surely a done deal. Question is in what capacity? Clearly there is no other US based customer that can jump up and become a new 10% customer except them.
- What is the build-up of 3 axis for? If in some gaming system or 2nd tier wearable ok, but if that is what Apple would put in their iwatch - ugh.
- Inventory build-up was to prevent having problems producing and delivering newer product to the Tier 1 players in 2H of calendar 14. Hopefully they will have plenty of other business to consume this built up 6 axis inventory. Got to be a little concerned with STM winning whatever it won with Xiaomi. Also hope yields and margin on new product is decent.
- Have you seen the new estimates for calendar 2015. Orders are there for the taking - they need to execute now.
- I expect a pop and let down after we are in a teardown for Apple, but this appears to be an easy double if the market cooperates - big if.
- We have one more qtr of YOY eps decreases, after that huge upsides. I still think we are early to the INVN game. As IBD says, most big stock runs occur after a co. shows multiple qtrs of triple digit earnings growth. They should start having major EPS gains with the calendar Q4 , fiscal Q3 in Dec. I think we hit 40 by then, and this could really run after that if they get 7-axis out and some other market opens up.
- I'm real curious how much growth they could get with drones.
- Not w/o risks. They need to be honest about future margins. I don't think they will be mid 50's anymore, but upper 40's ain't bad, if they can slow the asp reductions each year.
Problem with Xiaomi is that I think we lost a socket there to STM. Perhaps we won an OIS socket but losing the 6 axis spot would stink. Per STM's last report:
"Began ramping production of 6-axis smart sensors for Xiaomi"
I don't like it either, but it is the Silicon Valley game they must play to get the best and brightest engineers. It is ok if they generate the revenues needed to maintain operating margins.
Ultimately, I do think this is a big problem for INVN. Everyone wants Apple and Samsung as customers, but they require price decreases of atleast 25% a year and your high priced engineers are requiring more stock and higher salaries. Quite the balancing act to forecast and achieve higher revenues, manage to reduce mfg'ing costs, while investing a lot into R&D.