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InvenSense, Apple and more pick list scheduling ?2

08:24 05-May-17


INVN is down slightly this morning on a report from Bloomberg that Apple will be second-sourcing from Bosch.  This is not really a surprise, and the stock would have to drop a good deal more for me to be inclined to take advantage of the situation.  This is all the more true because of the solicitation efforts that InvenSense has had to make to complete its sale to TDK.  The company only needs a simple majority of votes from shareholders, most of whom are institutions, so it should be a formality, but non-votes effectively count against the transaction, as pointed out in the latest proxy statement.  The vote should be a fait accompli, but I've made a good living by NOT relying on fund managers to be smart.  We'll be absolutely sure sometime after May 17th.

May 11th will be a busy day as there are also two more pick list earnings announcements being added:

Himax will join eMagin in announcing before the bell.  On average analysts project earnings of 3 cents per share on $163M worth of sales, with revenue climbing to $184M in the current quarter.  HIMX has been tempting below $7, especially after seeing the reaction to MagnaChip's report move MX close to what I regard as current full value.  HIMX is even more volatile, though, and I've held off for that reason.

Regardless, I continue to watch the company's technology with interest, especially the always on light sensor that it announced at the end of last year.  There has been a follow-on investment in Emza Visual Sense, with whom Himax has worked for years, though not nearly as long as Himax has been working with CMOS image sensors.  There are two reasons why companies make such an investment:
  1. to gain control of compelling technology
  2. to keep a minorly useful partner from going under entirely
The terms of this deal weren't disclosed, so it's difficult to speculate as to which this might be.  The two aren't even always exclusive.  The quotes and milestone options make it seem like Himax is just looking to add some complementary functionality to the HM01B0.

Again fair value seems to be in the $7-8 range, and I'm personally holding off unless more of a gap from the bottom of that range emerges.  If the company surprises to the upside, I may be missing the boat, but I'd rather err on the side of caution.  It seems too early for the vision tech above to start figuring in, though one never knows what projections management will make.  The big question is when we'll have hard numbers on AMOLED display drivers.  MagnaChip declined to really provide them, but Himax could conceivably differ.

After the bell comes the report for Westport Fuel Systems, where the average of analayst estimates is for a loss of 15 cents per share on revenue of $77.7M, with the current quarter increasing to $80.1M in sales.  In the last report, management promised that guidance would be forthcoming with this one.  Now that the balance sheet is no longer an immediate concern, I think that seeing how cost cutting efforts figure into that will be the primary focus, along with any comments on the progress of HPDI 2.0, of course.  The rebate rate on WPRT is above 20% now, and short squeeze potential remains.