Revenue rose 5.4% year over year to $175.7 million, beating the consensus of $173.8 million. EPS of $0.09 per share beat the consensus of $0.07. Guidance calls for Q2 revenue to increase 17%-20% Q/Q, and for Q2 EPS of $0.11-$0.12. That beats the consensus 15% growth estimate and EPS estimate of $0.10.

In other words, it was a great quarter. Here are the key quotes and notes (in italics):

• While our large panel driver IC will continue to remain a major part of our sales, it accounted for just 34.2% of our total revenues for the first quarter compared to 42.8% a year ago and 40.7% in the fourth quarter of 2012. The significant sequential decrease was the result of slow monitor demands, high customer inventory, seasonal slowdowns that reduced sales through our related party customers. Among all our large size panel maker regions, China continued to show impressive growth year-over-year.

  In other words, our biggest business shrunk and we're still growing faster than Wall Street expects.

• Same-store small and medium size drivers came in at $91.3 million up slightly 6.1% from the same period last year and up 6.9% sequentially. As a segment, driver IC both small and medium size applications accounted for 51.9% of total revenues for the first quarter as compared to 33.4% a year ago and 34.8% in the previous quarter.

  In other words, this is our biggest business now and it's growing nicely.

• Our small and medium size driver sales…managed to achieve a sequential growth mainly because of the strong sales to first tier international smartphone brands. With strong year-over-year growth as a result of the robust sales of smartphone, tablet and automotive display applications.

  Well positioned in hot markets. FYI, non-driver products revenues were down sequentially due to weaker CMOS image sensor sales. Higher resolution units are expected to experience "strong growth momentum during Q2 and throughout the rest of the year."

• Revenues from related parties continue to decline for the first quarter of 2013 were down 30.4% from the first quarter of 2012 and down 27.4% from the same period last year. Related party sales accounted for 25% of total sales in the first quarter compared to 37.9% a year ago and 31.8% in the previous quarter.

  Innolux continues to diversify away from HIMX. This has held growth in check. Innolux could also serve as a headwind for the stock in the coming months, because it filed to sell somewhere around 25 million shares of HIMX that it owns (and now has a nice profit on).

• Our GAAP gross margin for the first quarter of 2013 was 24.6% a 170 basis points expansion from 22.9% a year earlier and 130 basis points improvement from 23.3% in the previous quarter. This is the six conservative quarter of gross margin improvement and the highest gross margin level since the third quarter of 2008….Gross margin improvement will continue to be one of our key business goals going forward.

  Speaks for itself.

• Our cash, cash equivalents and marketable were $158.9 million at the end of March 2013, a significant increase from $102.1 million for the same time last year and $138.9 million last quarter.

• Inventories of March 31, 2013 were $138.3 million up from $118.5 million a year ago and up from $116.7 million a quarter ago…to accommodate for the expected increase of shipments during the second quarter

• Accounts receivable at the end of March were $189.9 million as compared to $189 million a year ago and $209 million last quarter.

  All nice improvements.

• Capital expenditures were 4.7 million in the first quarter versus $1.6 million a year ago and $2.2 million last quarter. The capital expenditure was mainly for purchase of some in-house driver IC testers to cope with higher demand anticipated due to strong smartphone and tablet driver sales.

  Speaks for itself.

• We paid an annual dividend of $6.3 cents in July 2012, which equals to 100% of our net income for the year ended December 31, 2012. The board will decide on our 2013 dividend soon.

• With regard to our $25million share buyback program...no ADS was purchased in the first quarter of 2013 because our share price appreciated significantly in the quarter.

  Between this and the Innolux comments above, we're a little concerned that the stock may need to take a breather.

• Out of the total share repurchase plan of 25 million announced in June 2011 $11.6 million remains unused. We will continue to execute the remaining share repurchase program in accordance with Rule 10b-18 and in compliance with any other applicable legal, regulatory and contractual restrictions.

• We are confident we have maintained a competitive position in the large panel segment and have contributed to new growth opportunities presented by China continuing the expansion of their panel production capacity and potential new business from Korea.

  Korea...a.k.a. Samsung

• The prospects of our small and medium-sized panel driver business remains a focal point of our business in 2013. We are in a strong position in the smartphone sector with leading technologies, competitive products, and good customer lineup. We will further expand our smartphone customer base which has already covered first tier international and Chinese brands as well as the fast-growing Chinese white-box market. Smartphone application has been the largest revenue contributor to our non-panel applications.

• CMOS sales should "rebound strongly in Q2 with sales expected to triple from the previous quarter to become our single largest non-driver segment.

  a.k.a. cell phone cameras. This time next year, LCOS (displays for Google Glass and Xbox Goggles) could be the biggest non-driver segment.

• Typically we highlighted our collaboration with several top tier customers from the new head-mounted display application. I would be remiss if I try to ignore the attention lately on our rumors with certain customers on head-mounted display products.

  As a general disclosure, we do not disclose or comment on specific customer information unless it is required by the SEC reporting guidelines or the customers themselves publicly identifies us as a supplier…Our focus remain to continue to work with our customers who try to bring new technology display product to the market as soon as we can. All first development project is under strict disclosure agreements.

  As we mentioned in early earnings calls head-mounted display is a new and exciting product area with a great deal of potential in many applications where we believe our technology is superior to other competing technologies.

• Now I would like to spend a few minutes to talk about the share registration statement which we filed on April 30, 2013. The filing was mainly due to the request of Innolux Corporation…The share registration statement allows Himax and Innolux to offer a sale of shares from time to time before the registrations expires. In one or more topping offers but up to 75 million of 472 and 473 million ADS and 25,299,753 ADS respectively. For more details regarding our share repurchase program you may also refer to our press release on April 30th…We decided to file for all primary shares because share registration statements was clearly effected by the SEC who will mainly trade through all period of three years during which time we may offer new shares and anytime we are going through the registration and SEC re process.

  In other words, there could be some new supply of shares hitting the market soon. Plus the cat is out of the bag regarding Google Glass and other wins, so the stock could take a breather during the summer months.

• Regarding microdisplays (i.e. Google Glass) "we're going to see the strength in Q2 and the then again in Q3, and then again in Q4, in other words, we're expecting very significant quarterly growth throughout this year and hopefully next year as well, but that again is coming from a small place."

  Also, "we have actually a very good number of customers lined up...we are very careful in choosing our customers…we are not prepared enough (to ramp production versus all the potential demand) so we are in a very strong position… I believe that the technology is superior by far and is for the foreseeable future."

  NICE !

• The smartphone for the first quarter about close to 70% are sold to the Chinese customers and tablets about over 45%.

• We are going for our 8 megapixel product…for July. 5 meg product has been around since last year nationwide.

• Are you seeing a tight capacity at Chipmos in Japan?

  Yes, on the high end in particular. Or we call high IC power testers. They are applied only for high-end smartphone and tablet product.

  Do you intend on buying more testers as the quarters go on?

  Yes.

• …how you make a 4K TV set a convincing product for the consumer (to make them) willing to pay the premium? I think the industry still has a (ways) to go.

  All random stuff with not too much bearing overall.

Disclosure: I am long [[HIMX]].

I feel the need to start by saying that we have nothing personal against the company. In fact, almost every PERF employee I have encountered has been kind and friendly (which is commendable considering my bearish stance). That being said, stock investing is about cold hard facts, so I have to provide a cold hard analysis.

As for the 10-K, in my opinion it was an ugly read. It came as no surprise to see the stock fall on Monday and Tuesday, even as the broader market hit new all-time highs. Here are some of the key quotes, along with my commentary in italics:

They saved the best for first…

"In April 2012, the Company acquired Parlux, further enhancing its position as a manufacturer, wholesale distributor and specialty retailer of fragrances and related products. The Company has merged some of Parlux's operations, including sales, marketing, finance and human resources, with its New York offices. Management will continue integrating the operations of Parlux over the next twelve months and expects to realize greater margins on fragrances licensed by Parlux and sold through the QFG, Perfumania and SOW divisions. Management also expects that the increased size of the Company will help obtain more and higher profile fragrance licenses, which will broaden the Company's product offerings and enhance revenue and gross margins. Management also anticipates that the Company will continue to realize operating synergies, resulting in reduced aggregate costs in distribution, promotional activities, administration and operations."

Nice sentiments, but the 2012 results paint a completely different picture…

"Net sales increased 8.4% from $493.5 million in fiscal 2011 to $534.8 million in fiscal 2012. Of the $41.3 million increase in net sales, $7.5 is attributable to the fifty-third week in fiscal 2012."

Also, $39.9 million was due to the Parlux acquisition, part of which overlaps with the 53rd week data. Netting that out, organic (real) revenue growth was just $1.4 million or one-third of one percent (0.3%).

Similarly, "total gross profit increased 11.8% from $191.1 million in fiscal 2011 to $213.6 million in fiscal 2012, largely due to the Parlux acquisition."

In addition to its anemic growth, Perfumania incurred "store asset impairment charges of approximately $2.8 million and $0.3 million for fiscal 2012 and 2011, respectively, and impairment charges on a building under a capital lease of approximately $5.3 million and $0.8 million for fiscal 2012 and 2011, respectively, are included in asset impairment on the accompanying consolidated statements of operations."

So, PERF took impairment charges of $8.1 million (a $7.0 million annual increase) against organic growth of just $1.4 million.

"The average number of stores operated was 344 in fiscal 2012 compared with 347 in fiscal 2011. Perfumania's comparable store sales increased by 0.6% during fiscal 2012." However, they "exclude stores that are closed for renovation from comparable store sales from the month during which renovation commences until the first full month after reopening."

With a number of underperforming stores being renovated, I suspect that their monthly same-store sales (SSS) figures are painting a deceptive picture of what they will report for April-quarter sales and earnings. April's monthly SSS should be out on Thursday.

After publishing a photo of an empty and ragged-looking store, the company was kind enough to reach out and let me know that the store was under renovation at the time. They also sent photos of what their renovated stores look like. While the upgrades are better than the old look, our retail analyst had this to say:

"you know, it's funny....those are nice pictures-very clean and modern. but i just don't believe in their concept in terms of how the average person likes to shop. especially when trying to find a scent. people like to try things without needing help or being watched over...they want to touch the bottles and have a hand's on experience. perf's format simply does not optimize that this is how the average person likes to shop. it isn't even that the stores are so awful looking-the one at the aventura mall was nice. nothing really bad to say about it."

Pursuant to this discussion, we took to the road and visited at least five Perfumania stores in southern Florida. In general, the stores were clean and the upgraded stores did look better than the rest. However, that didn't change the fact that store traffic was miniscule. In fact, there were more workers than customers at every store we visited.

For me, this calls into question the value of these upgrades. To be fair, I need to ask the company what kind of SSS improvements they have experienced in upgraded stores. However, I'm still waiting for a response my last questions regarding how many stores they plan to upgrade and how much each upgrade costs.

"The average retail price per unit sold during fiscal 2012 increased by 6.2% from fiscal 2011 primarily due to increases in selling prices of some products, and the total number of units sold increased by 1.7%." However, "the increase in the number of units sold was due primarily to the additional week included in fiscal 2012 compared with fiscal 2011, as discussed earlier, which resulted in $3.0 million of additional sales."

"SOW's consignment sales increased from $71.7 million in fiscal 2011 to $73.7 million in fiscal 2012. The increase in SOW's net sales is due primarily to an increase in sales by SOW's largest customer offset by the loss of two consignment customers during fiscal 2012."

"Excluding the results of Parlux, the decrease in wholesale sales of $8.6 million is the result of less product availability for QFG and less customer demand during fiscal 2012 compared with the prior year."

Just to top things off, share-based compensation expense was up more than 3,000% to $4.5 million.

Bottom Line: Considering the contents of PERF's 10-K, the slow store traffic, and the company's pending removal from the Russell 2000, we feel comfortable with our short position and plan to hold it until the official Russell removal in late-June.

Disclosure: I am short [[PERF]].

The xPrintServer Home Edition saw a seasonal slowdown, while the Office Edition ramped up. Net-net, we estimate that the xPrintServer family experienced a slight decline versus the holiday quarter (Dec) which experienced close to 100% sequential growth.

The quarter had an equal number of positives to offer. As we previewed last quarter, the third quarter saw the launch of a new xSenso product (xSenso Controller) and a wifi version of their xPico offering.

Also, the autumn signing of Ingram (Europe) is still proceeding well and starting to generate orders. As LTRX signs Ingram's VARs over the next couple of quarters, revenue should ramp up. This is in-line with the time line we originally envisioned. The relationship is designed to take LTRX's presence in Europe (in embedded products) and extend that to its external and device management offerings. Looking at its complete presence in the U.S., we can estimate that this relationship has the potential to drive EMEA revenues from $3.6M at present to $7M in the future.

Similarly, its relatively new relationship with Arrow in Asia has the potential to turn APAC into LTRX's largest geography, adding $5M in revenue per quarter. However, investors will have to be patient, as this particular relationship will require 6-8 quarters to ramp up.

Here are our updated revenue contribution charts:

Current Revenue Contributors (Sept/Dec 2012)

* LTRX's most successful product ever took 12-18 months to ramp.

Future Revenue Producers (Dec 2012)

Source: Pipeline Data, LLC

Disclosure: I am long [[LTRX]].

Looking forward to Q3/4, I sense that the partner revenue issue will be resolved. I would also bet that the slowdown at EMC will resolve itself in short order, as this relationship makes a lot of sense for both sides. As for the direct sales execution, I have to think it will take until Q4 for that to be resolved. Things like that don't get fixed overnight.

The new partner win and renegotiated contract were both positive, though I wonder about the motivations behind the renegotiated terms in light of the fall-off in royalty revenues.

Market-wise, our research shows that demand is there and ATTU offers the best solution among independent providers. They just need the execution to match (easier said that done). Based on the commentary and guidance, Mr. Alon must feel confident about exiting 2013 on a 30% growth rate. That would be in-line with market growth figures.

Clearly, this quarter casts doubts on the company's credibility and ability to execute. As we now see, Alon's responses to my grilling on last quarter's call was certainly a sign of things to come. This is why I shifted the stock from Great Find to Wait Time. Specifically, the hype had/has peaked and now have to deliver.

All said, ATTU got a nice bounce on the new deal and solid guidance. The stock is still a near-double from our initiation point and the company has the right products to generate strong growth. Just remember, the share appreciation represents profits, but also risk (which is augmented by the company's Q1 missteps).

Net-net, the balance of risk and reward seem fairly balanced (essentially a coin flip at present). Thus, the stock will remain rated "Wait Time" until further notice.

Disclosure: I am long [[ATTU]].

In the meantime, take note of our "Current Classification" column. It provides our current rating and links to key articles regarding when to take profits. My profile provides all the information you need to track our ratings on an ongoing basis (especially the Stocks To Triple Instruction Manual).

You can also find links to all of our initiation pieces here.

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Poised to Triple Performance

* Our picks have the potential for great gains, but also great losses. Selling losers early is one of the keys to maximizing profits. Thus, we employ a 20% loss-limit (from our initiation price) in our portfolio.

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Stocks to Triple: Initiation Pieces