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INVN And The IOT - Internet Of Things

|Includes: InvenSense (INVN)

I have been reading lots of article regarding how Invensense will grow margins and increase its top line via the Internet of Things. Nothing could be farther from the truth. Invensense will continue to struggle with margins and bottom line growth if it chases the nascent margins, unpredictable order volume and bid based sales inherent to a market called the IoT. INVN has customers who make their bottom lines grow by beating up suppliers, they dont need any more customers like those. However INVN has potential as an aquisiton target.

The manufacturers of devices, appliances, etc. that want IoT capability are in a low margin, cash flow poor or low volume businesses. These businesses include biochip transponders on farm animals, electric clams in coastal waters, automobiles with built-in sensors, field operation devices that assist firefighters and emergency responders, appliance manufactorers etc. I dont see these business paying up for chips that increase their price points.

If INVN is interested in increasing share holder value, not likely considering the top ranks are aggresivly exersising stock opitions and in the same SEC Form 4 selling the stock, it will position itself as a merger or aquisition target.

The CEO selling down to .00367 percent ownership, the VP of engineering selling down to .000516 percent ownership is telling. They have the sales but not the margins. INVN move now to be aquired or face the fate of GT Advanced Technology GTAT!

Disclosure: I am/we are long INVN.

Additional disclosure: I am long the Aug 15 $14.00 calls.