Update: InvenSense And Apple Sneak Peek

| About: InvenSense (INVN)


A sneak peek at the iPhone 6 has implications for InvenSense.

The latest reports could mean I'm wrong about a long-time prediction regarding a design win with Apple.

However, recent insider sales give additional evidence that I'm right where it counts.

A sneak peek, supposedly of an Apple's (NASDAQ:AAPL) new iPhone 6 circuit board has been released. The photos do NOT show InvenSense (NYSE:INVN) products, though it's assumed that the 6-axis gyro is in there somewhere. What it does show is a chip that appears to be an NXP sensor hub similar to the M7 that was debuted in the iPhone 5. This in turn implies that there is no SoC (system on chip) from InvenSense in the product, which is consistent with my statements that the new product line will take time to shake out and get traction. It seems clear that Apple is continuing its modus operandi of selling value hardware at non-value prices. It will be interesting to see how much value they've extracted from InvenSense.

In the meantime, departing CFO Alan Krock has sold virtually all (96%) of his shares in the company, and other insiders have been selling as well. As commented in my update article, this is not particularly damning, but the sales are also definitely not characteristic of individuals who know that InvenSense is about to experience the huge jump in sustained revenue that some have predicted.

INVN has recovered from initial post-earnings declines, but has not exceeded the highs it achieved before that event. Recently, the stock has been volatile in response to a report of delays in shipping, or maybe even introducing a wearable iWatch, as well as an article in Barron's noting the run-up in Apple suppliers and potential for pull back following the September 9th announcement. Both articles echo what was said in my InvenSense earnings preview over a month ago. That article was arguably wrong about the post-earnings reaction in INVN shares, in part because management failed to deliver on promises to detail the financial impact of recent acquisitions, and once again pushed out guidance on deals with new customers. I've long said that InvenSense will only get an Apple design win when the latter company introduces a wearable. Recent info indicates that I might wind up being wrong about that too, but I continue to think I'm right about INVN being at least fully valued at prices in the mid-twenties.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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