Genesis Microchip Competitor Himax Prices IPO (GNSS, HIMX)

Includes: GNSS, HIMX
by: Jon Ogg

Himax Technologies, Inc. (HIMX) priced its initial public offering of 52,000,000 American depositary shares (ADS's) at US$9.00 per ADS, which is at the high-end of its $7.50 to $9.00 estimated range. Each ADS trades on a 1:1 share basis to its local shares. Morgan Stanley acted as lead underwriter of the offering, with Credit Suisse as co-lead manager, Banc of America, Piper Jaffray, ABN Amro Rothschild and HSBC acting as co-managers. The underwriters have 7.8M shares indicated for the 30-day over-allotment.

Himax is a Taiwanese fabless designer of semiconductors used in TFT-LCD flat panel displays. Its fiscal 2005 Revenues were $540M and it posted net income of $61.5M, which is up from $300M revenues and $36M net income in 2004. While the company did price at the high-end of the range and while the overall demand for flat panel displays has been strong, the company is coming public the day after a revenue warning from Genesis Microchip Inc. (GNSS) on weaker-than-expected flat panel TV demand in the EU and China. It is possible this will be dismissed as an issue since GNSS noted that one of the circuits in the chip did not meet the standards of one of its biggest customers, but we'll have to see today how HIMX trades and if it weakens demand for the shares after the open. Demand from the street on this has so far been described as good and above average, but not sizzling. It did price at the high-end of the range but demand didn't create an above-range pricing. One figure for the initial post that was tossed out there to me was a $9.35 indicated opening price. These price levels are highly subjective and can be very inaccurate so keep in mind that the level may be off. We'll find out soon enough.

Its largest customer, Chi Mei Optoelectronics, a publicly traded company in Taiwan (stock ticker '3009' in Taiwan), owns about 14% of the company. It appears as though some 40M of the shares being sold are from existing shareholder(s), but that hasn't been confirmed.