InvenSense pares losses as sell-side defends

"We think the tone is similar to [modem maker] USRobotics many years ago when an inventory build into a major production ramp polarized investors ... while the longs were talking about this new online 'internet.' We don’t want to draw a shameless parallel here with sensor proliferation and contextual awareness, but we will," writes Needham's Vernon Essi, diving into ancient tech history to defend InvenSense (INVN -6.5%) following its soft FQ1 guidance.

Pac Crest's John Vinh is also defending, albeit while cutting his PT by $5 to $22. “Despite a disappointing outlook due to weak order trends at Samsung (47% of revenues in FQ4 vs. 35% of revenues in FQ1), we remain confident that INVN is on track to ultimately penetrate Apple this year."

On the FQ4 CC (transcript), CEO Behrooz Abdi stated 6-axis MotionTracking sensors will continue accounting for over 70% of units and revenue in FQ1. He also talked up the potential of a 7-axis sensor (includes a pressure sensor) and ultra low-power sensors.

Vinh questioned Abdi about the pace of image stabilization (OIS) design wins; Abdi insisted InvenSense has seen "quite a bit of adoption," but added tier-1 OEM wins could take a year or two.

While FY15 revenue guidance was reiterated, FY15 EPS guidance has been set at $0.70-$0.75, below an $0.83 consensus. LG and Xiaomi are expected to join Samsung as 10%+ FQ1 customers.

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Comments (6)
  • Budavar
    , contributor
    Comments (1410) | Send Message
    Do we have a pussy cat
    Or a pussy riot, that
    Is my question,
    Distinctive delection.


    Analysts damning with praise
    AND panning it by an un-raise
    Of price targets
    Such double talk gets
    2 May 2014, 03:18 PM Reply Like
  • Esekla
    , contributor
    Comments (4664) | Send Message
    The USRobotics point is a good one. My article, published this morning, takes it a step further to detail how the next catalyst could be exactly one month away, and how InvenSense is already moving to enable the next wave of innovation in mobile usage, which will eventually lead us to that ubiquitous sensor reality.
    2 May 2014, 03:48 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1583) | Send Message
    I am keeping my shares and have some hopes for the company. They tripled their inventories at the end of this quarter as opposed to last year's quarter. It is not certain whether their new CEO is a good CEO but if you look at his experience with Qualcomm it is evident that at least he is not a moron. And only a moron would build up inventory without being extra extra certain he will be able to sell it soon.


    Currently their inventory is more than they guided for their revenues next quarter. Obviously either the inventory is overbuilt or the guidance is really understated. Well, any CEO knows that overbuilding inventory can result in your career being over. On the other hand, sandbagging guidance does not have that bad of consequences.
    2 May 2014, 03:54 PM Reply Like
  • MJ Pragmatist
    , contributor
    Comments (413) | Send Message
    Your inventory comment seems quite logical, but why build so much so soon for something like an iWatch launch in September?
    2 May 2014, 08:47 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1583) | Send Message
    Because TSMC is now booked solid through the end of Q3. The cell phone industry is hot and the fabs that makes chips for them are booked solid. Thus, INVN did well to get some more chips made during calendar Q1 which is the slow quarter for the industry. Although I am sure they have ordered some production during the future quarters as well.
    2 May 2014, 09:54 PM Reply Like
  • tle9
    , contributor
    Comments (3) | Send Message
    A big year coming up for INVN, ramping up productions would only be exercised when met with a large demand. Coming in time with Apple's next refresh and one from Samsung recently, I would expect the same market demands. The smart phone industry alone has lifted the MEMS gyroscope market to where it is now, and it'll continue as smart phones recently surpassed feature phones. Still Long and to reach $25.
    2 May 2014, 05:57 PM Reply Like
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