CES 2017 Preview ?3

15:07 04-Jan-17


CES 2017 opens tomorrow, and of course, there is a deluge of associated announcements.  Before attempting to summarize the ones related to companies that I track, it seems worth reminding investors that CES-related gains are rarely sustained.  Now on to what to expect in the days and months to come:

Autos are seeing a renaissance at CES due to the focus on automated driving and Intel is touting new communications and computing systems to be used in partnership with BMW and Mobileye.  Intel's investment in HERE is further evidence of both the direction of this trend and Intel's transformation from its legacy business into an enabler for the consumer segment, but I am not willing to chase INTC or any other driving-related stock on the long side at current prices.  Even IDTI, which is demonstrating a new in-car wireless charging platform seems to pricey to me at the moment, despite an upcoming analyst day on the Feb. 12 and great potential in other areas.

A number of new cars will also be featuring innovative displays and tail lights, which brings us to LG Display, which is sourcing most of these. Of course, I've already mentioned LGD sourcing panels for new TV models by Panasonic and Sony.  For its part, LG should be unveiling improvements in its wallpaper and transparent displays, in addition to existing consumer models.  I'm a little surprised that LPL hasn't risen more on such developments, but I see it as close to fairly valued, given the broader market risks and competition.  AMOLED screens will also keep pushing further into laptops and larger portable devices, which is good for UDC, but I still see OLED as overvalued.  To that end a recent Korean report pegs the supply to Sony at just 100K for 2017. 

At this stage, I continue to be more focused on the sensor companies that form the basis of new consumer technologies, and Himax has such an offering that applies to IoT as well.  InvenSense is out with 3 new products:

On the last point, devices to date have underwhelmed, which has contributed to the poor performance of INVN before the buyout offer. I was just asked if there is any point in continuing to hold the stock and replied

My opinion is that the $13 purchase price is more than fair.  That leaves less than 2.5% annualized gain until the expected closing.  I certainly expect to do better than that in any of my investments, so my answer is No.  The only way that answer could turn out to be wrong is if someone else decides to bid higher for the company.  Buyout premiums can be all over the map, so it's possible, but you've got my answer.

However, another feature of this year's CES is the introduction of Android Wear 2.0, which will be adopted by multiple vendors rather than being offered directly in a Google-branded product.  Perhaps the intersection of these will improve the functionality of wearables over the next year.

Finally, I will also be interested in tracking the status of AR/VR devices.  To that end, both eMagin and MicroVision will be showing off their displays.  I continue to think that the real potential for such devices relies on these sorts of micro-displays, rather than the current technology, and that the inflection point is still at least year or two off.  That goes for rollable and foldable devices too, despite the continuing push to be the first to market.  In the meantime, EMAN and MVIS are still GRoDT stocks whose main opportunity for immediate sustainable gains would be buyout (STMicro seems like a candidate in the latter case).  Despite the potential, I am never willing to gamble heavily on such possibilities.