OmniVision Technologies Inc. (Sunnyvale, CA), which develops CMOS image sensors used in electronic cameras and other optical imaging devices, has reported revenues of $11.2 million for its first fiscal quarter ended July 31, 2001. This represents a 37-percent decrease from revenues of $17.8 million reported for the same quarter of the prior fiscal year and an increase of 19 percent over revenues of $9.4 million reported in the previous quarter. Company management says that the decrease from the year ago quarter was primarily due to excess customer inventory in the PC camera business and the general economic slowdown. The sequential increase in revenues is mainly due to increased demand for the firm's optical imaging solutions for home entertainment/home security cameras.
Gross margin for the first fiscal quarter was 45 percent, up substantially from the pro-forma gross margin of 31.9 percent in the prior quarter, and 31.0 percent in the same quarter of the previous fiscal year. The gross margin improvement in the first quarter is a result of favorable product mix and improved yields on certain products, and the sale of approximately $1.1 million of product that was written off in the January quarter of fiscal year 2001. Company management believes these factors may continue to influence gross margins in the future.
Expenses for R&D in the quarter increased to $1.7 million or 15.1 percent of revenues from the previous quarter of $1.5 million or 16.0 percent of revenues. Research and development expenses increased on a dollar basis primarily as a result of the firm''s product development program cycles. Selling, general and administrative expenses in the quarter increased to $3.2 million or 29.0 percent of revenues from the previous quarter of $2.6 million or 28.0 percent of revenues. The increase in selling, general and administrative expense was primarily a result of higher than normal expenses for legal fees.
Net income for the first fiscal quarter was approximately $510,000 or earnings per share of $0.02 on 24.4 million diluted shares. For the year ago first fiscal quarter, net income was $1.9 million or earnings per share of $0.11 on 17.5 million diluted shares. The net income and earnings per share for the first fiscal quarter were the result of the favorable product mix effect on gross margin, partially offset by the higher than normal legal expenses associated with legal action resulting from infringement claims by Photobit Corp. (Photobit) and California Institute of Technology (Cal Tech). OmniVision management “believes there is no valid claim under any of Photobit's or Cal Tech's patents, and OmniVision is aggressively protecting its rights, as well as defending against any and all claims.”
“The results in the first fiscal quarter reflect our continued strategy of product diversification to compensate for the softness in the PC camera manufacturing business,” states Shaw Hong, President and Chief Executive Officer of OmniVision. “We anticipate the relative softness in the PC camera manufacturing business to continue for the second quarter of fiscal year 2002 as many of our PC camera manufacturing customers continue to work off their inventory levels. At the same time, we will continue our diversification efforts with applications in the handheld wireless device markets, such as cell phones and personal digital assistants (PDAs), and in the home entertainment and home security camera markets.
“It is important to note that cash flow from operations was positive and we ended the first quarter with $57.6 million in cash, equivalents and short term investments, up $3.6 million from the $54.0 million in the prior quarter,” concludes Hong.
Revenue guidance for the second fiscal quarter ending October 31, 2001 is for revenues to be relatively flat to modestly improved, in a range between $11 and $13 million. As a result of the accelerating legal process in the Photobit patent actions, higher legal expenses are expected to result in earnings per share in a range between $0.0 and $0.02. The company reports it is not able to give further guidance until market demand and trends become clearer.