You just described it. The sale is recorded when the item is shipped to the end user. It is then taken out of inventory and the profit recognized.
There is a principle in accounting called matching (ie. matching revenues and related costs in proper periods.) You typically wouldn't see a draw down in inventory on the balance sheet until revenues are recognized.
Revenue from the sale of the Company’s products is recognized when all of the following four criteria are met: (1) persuasive evidence of an arrangement exists; (2) the product has been delivered; (3) the price is fixed or determinable; and (4) collection is reasonably assured. Delivery takes place after the transfer of title which historically has occurred upon shipment of the product unless otherwise stated in the customer agreement.
For direct customers (i.e., other than distributors), the Company recognizes revenue when title to the product is transferred to the customer, which occurs upon shipment or delivery, depending upon the terms of the customer order.
The Company primarily enters into sales transactions with distributors in which the distributor is purchasing product for an identified end-customer. For these transactions, the Company recognizes net revenue upon either shipment or delivery to the distributor, depending upon when title transfers under the terms of the order. Pursuant to the terms and conditions contained in the agreement with its distributors, all sales to distributors purchased for an identified end-customer are non-refundable, do not have rights to return product purchases except under the Company’s standard warranty terms, and do not include any price concessions or price protection."
For apple, depending on the contract, I have seen some suppliers not able to recognize revenue until Apple actually sells the phone or computer or whatever to the end user (you). Apple typically has very stringent right of return policies. So just because chips have been delivered to the production line doesn't necessarily mean revenue can be recognized.
Unfortuneately a miss is a miss is a miss. Apple and other OEM's do not want suppliers preannouncing what technology they are using so we wont know about apple probably until the teardowns are done. I don't even think there is a teardown yet of the Amazon Fire phone. If they come in two cents short and basically say the same thing last CC "growth coming", we will have a downdraft. I don't expect any surprises but could be wrong. That's why I kept half my position. Even if we get a pop there will be a pull back. As far as options strategy, you are talking about some type of Put/call spread. Before you do anything look at the tax cost of selling shares. I found that if I sold my shares with higher cost basis it was actually cheaper to just sell my shares versus say buying a put option to protect on the downside. The risk I take is that they hit it out of the park then I have to wait for a pull back to get back in. But that's a risk I am willing to take given that INVN represented a large portion of my portfolio.
The potential is HUGE. The question is when will that happen. This stock is VOLATILE. It still has a LARGE short interest. If analysts don't like what they hear in the CC, this can easily drop again to around 17 for a 30 percent loss. I started buying shares at 14 and watched my subsequent purchases drop to 10 all on a internet rumor the company had lost Samsung as a customer. Great in hindsight, but gut wrenching at the time. When that proved to be false it rocketed back up. Right now in my opinion we are a couple points above where the stock should be trading WITHOUT apple. Its an expensive stock here and not for the faint of heart. I was expecting the stock to be much higher on the upcoming Iphone 6 and new Ipads but it looks like the market has taken a thrice burned (Iphone4, 5 and 5S) wait and see approach. My advice to any new investor would be to wait for the CC and dollar cost average in. There might be a surprise but that's about a 50/50 bet given their last CC where management prepared people for an upcoming so so quarter. The risky quarter is going to be September because management has taken a "wait for the back half of the year" approach. They really need to have great guidance going forward to get INVN to new highs, otherwise we once again are just at the top of the trading range.
No you are correct, back in the 20's it didn't. I am talking about the last 3 or 4 CC's. And I have seen this with other stocks. I have an investment in SYNA (touchscreen controllers and fingerprint ID technology) and that stock was in the 20's in 2012, went into the 30's and 40's a year ago (looked like it wouldn't budge because it was thought its market was saturated) and now is in the low 80's after hitting the low 90's ( this after some strategic acquisitions).. It takes patience BUT you have to buy the stock right. These "internet of things" stocks can be volatile and if you get in at the highs and lose your nerve at the lows, you will be in a bad place.
Stronger?? It has been hanging around 21 - 24 for some time. I had lots of optimism at 17 and continue to do so, but I just cant once again see thousands and tens of thousands in this case go out the window after the CC. I hope they hit it out of the park but I don't think this is the dead last time you will see INVN trade at 23 and change.
If they had guided higher in the last CC I would agree with you, but they didn't. Yes total surprises can happen. That's why I am still keeping half my position.
I have owned Skyworks and have watched the company for some time. Unlike INVN, Skyworks has consistently beat earnings estimates and raised expectations as they did with this CC. Skyworks has also broad opportunities that it is CURRENTLY taking advantage of in analog, not just wireless handsets. Yes it has apple as a customer, but its not apple that is driving the run up in the stock. INVN on the other hand is currently married to the wireless handset. Yes there are great opportunities ahead, but so far its all just hopes and dreams. Its still a question if Iwatch type devices get adopted in great numbers. Same with google glass. I think that will eventually happen, but that's the difference between skyworks and INVN. When I was a skyworks investor, it was in the twenties but all its predictions came true and pushed it up to now fifty. That's not the current case with INVN. Skyworks management already set up for the current beat in estimates in the last CC. I thought it would drop farther but it didn't. INVN on the other hand set people up for a so so quarter with growth coming in the September and December quarters. If that doesn't happen, this could be a stock in the mid to low teens. I believe the decrease in the short interest as firms unwind their positions is what's holding up the stock. I knew Skyworks, INVN is no skyworks (to quote Dan Quayle's debate opponent in 1988).
if INVN doesn't hit it out of the park.
And I plan to have at least half my position off the table. I think there will be opportunities under 23 UNLESS they have really good guidance. But if you read the last CC transcript they were basically prepping people for a so so quarter with the growth coming in the fall.
1500 shares filled at 23.50. So far about 30 percent of my position. Was hoping for 24 and above but I will take it and keep an eye on the price action.
I hope so. Then I can put in more sell orders above 24. So far I have trimmed my position by only about 15 percent and I want to sell at least half.
So if you missed the apple announcement in GTAT you had a chance to get in at 8 and watch it go all the way to 20. Its now at 15 ironically on fears of an Apple PULLBACK. Apple is a two edged sword. It giveth and taketh away. I have seen more than a few suppliers get their stock to go way up on an announcement of Apple as a customer, only to have euphoria die off when it is realized what a harsh task master apple can be. If Invn gains apple as a customer I don't expect it to treat INVN any different than any other supplier.
John Vinh - Pacific Crest Securities, Inc., Research Division
Great. And then, my follow-up question is, can you talk about the progress that we've seen with OIS? It seems like we really haven't seen the kind of major adoption at the Tier 1 level on the OIS front. Can you talk about how you're looking at that trending into the back half of the year? And are there any sort of supplier capacity constraints that's limiting OIS adoption?
Behrooz Abdi - Chief Executive Officer, President and Director
"Well, the dynamics really hasn't changed. So this is not at all unexpected. Every time I've gotten that question, in terms of OIS adoption, I've always said that the Tier 1s will take more time, perhaps another year or 2 years, to adopt it. And that's exactly what we see. So more of Tier 2, Tier 3s, we are seeing wider adoption. We see quite a bit of adoption, not just in Korea, but also in China, companies that want to bring the camera experience as a differentiated experience. So that trend has continued, and there is going to be a lot more variety of products with OIS. But the Tier 1s, our expectation is -- my expectation at least, is that it will still be a, maybe towards the end of this year, best case."
INVN's best chance to get Apple as a customer would be OIS in the Iphone 6. The Iphone wont be unveiled until probably September. All the comments in the last CC are basically "Wait until the back half of the calendar year." I don't expect any apple announcement to come out. If Invn is an Apple supplier, Apple doesn't want that known prior to product launch. The only way you are going to here about apple prior to a product launch is if they do like they did with GTAT and announce an investment in INVN. And speaking of GTAT, I went back and did some checking, When the announced they had not only gained apple as a supplier but also investor, the stock went from 7 to 10 in a day or two for a nice 40 percent gain, BUT a couple week later was trading at 8.
Long term view doesn't mean you are locked in no matter what. This is a volatile stock to say the least. By riding it down, I mean watching it go from 24 down to 17 like last time for a 30 percent haircut. That hurt. That was many thousands of dollars for me. If this was a couple hundred shares we are talking about I wouldn't give a damn but its not. Its thousands of shares. So now that it has recovered I am paring back my position to a more comfortable level. I am still bullish long term but at these levels I think the stock has all the good news (that is verifiable) more than priced in. If that stock just makes expectations I wouldn't be surprised if it broke down to sub 20 in short order. If they have a CC like last time I would not be surprised if we hit the mid teens again. Then its a buy without Apple. That's where I want to be.