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eMagin and Himax 1Q17 results +2

09:30 11-May-17


The eMagin conference call is just concluding, and I wanted to get something out around market open.  Management is shifting the marketing effort of Blaze Spark & Torch night vision products to first responders and utilities.  Management touts impressive technological progress in AMOLED microdisplays and eMagin still appears to lead in that way. 

With many well-established companies looking at AR/VR, eMagin is garnering a lot of interest, but such companies may be afraid to get into the actual manufacturing, as eMagin is doing.  By contrast, Kopin has entered the market taking a completely fabless approach so its costs should wind up being slightly higher.  I'd be more worried about good-enough competition from incumbent display makers.

After looking at this quarter's financial results, I expect that the company will have to dilute again unless it can win some new income very soon.  That may come from the military side of the business, where management reports renewed interest.

Shifting to Himax, it expects revenue to slowly begin rebuilding in the second half.  Unlike MagnaChip, it sees AMOLED driver sales decreasing and any rebound to be more of a 2018-2019 opportunity.  I suspect that MagnaChip is ahead in this area, despite being smaller.  It looks like Himax is shifting focus to the home-grown image sensing technologies that I spoke of, which is already seeing strong demand and will consume half of its increased R&D spending in the coming months.  MicroVision investors should note that this is laser-based, and that section of scanning solutions may involve partners.  Management guesses that product launches could begin early next year.  As we've seen with LG Display, shifting a business from one product focus to another can be very tricky.  HIMX shares are now back up, and I am not willing to chase them above $7 at this point.

On 05/11/2017 08:15 AM, Esekla wrote:

eMagin has reported results for its first quarter:

  • a loss of 6 cents per share misses by a penny
  • on revenue of $6.1M, which misses by $500K

Himax results are:

  • EPS of 1 cent misses by 2 cents
  • on revenue of $155.2M, which misses by $7.8M
  • current quarter revenue is guided to $147.4M, which misses by $36.6M

HIMX is down about 2% so far, validating my caution based on its volatility.  This was expected to be a tough quarter financially and another one is in progress, as Himax increases R&D spending.  I don't know how far shares will ultimately drop, but I am inclined to begin cautiously building a position in advance of the July dividend.  I am listening to the conference call, but will most likely switch to the eMagin call at 8:30.