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Apple woes could spell temporary trouble for INVN -3

08:49 05-Jul-16


It's been over a month since I've written about InvenSense, and the next quarterly report is still almost a month away.  The company just updated its corporate profile, but that's not even worth mentioning.  What is worth a mention is that the Apple relationship may weigh on INVN shares.

For the near term, there have been reports that component suppliers have not been seeing much in the way of orders.  That's being reinforced this morning by a bad quarter from Imagination Technologies.  Looking to the medium-term, it seems Apple may be pulling its usual routine of squeezing suppliers on prices.  There has been nothing specific to motion sensing on this front, but I see no reason why InvenSense wouldn't be susceptible as Apple attempts to buoy its financial numbers.  Looking longer term, the Apple ecosystem folding in on itself plays into my opinion that Apple is starting to need new technology partnerships more than it has in the past, especially with the fall product launch already garnering a lot of skepticism.  That could wind up being good for InvenSense, and of course, AU Optronics, but there is reason to worry about the next two quarterly reports.

That said, INVN continues to be cheap by trailing metrics and I also see increasing evidence that a wide variety of wearables are catching on with consumers in a big way.  A diverse and growing wearables market has always been my main thesis for InvenSense, whereas I've been lukewarm, at best, on the Apple relationship.  Still, it's going to be hard to make up for weakness from a customer that constituted 39% of sales last quarter.