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Seeing Value at OmniVision
07/08/2014 8:00 am EST
We continue to like this recommended stock in our special situations portfolio; the firm designs, develops, and markets semiconductor image-sensor devices, observes value investor Charles Mizrahi, editor of Hidden Values Alert.
OmniVision Technologies (OVTI) providing imaging technology found in mobile devices and computers. Its main products are CameraChip image sensors and CameraCubeChip imaging devices.
It is among the market leaders in global image sensor output. It has a strong presence in the tablet market with nearly two thirds of its sensors that enter the mobile market going towards the front/back cameras of the iPad.
In addition to its proprietary products, the company has a diversified approach. OVTI continues to find applications for its technology, giving the company exposure to several target markets.
Its imaging technology is utilized in industries ranging from mobile to automotive products. The "Internet of Things" is driving growth of sensors in the smart-home.
Diversification among different segments and geographic regions reduces the company's reliance on a particular division. It is well positioned to benefit from growth in emerging smartphone markets, especially China's evolution to 4G LTE.
OmniVision is sitting on more than $560 million in cash and investments. Management has reinvested capital to obtain internal growth without taking on excessive debt (only $36 million in short and long-term debt).
Management allocated around 8% of 2013 revenue to research and development. The company must continue to compete with other tech firms by constantly evolving its technology through R&D.
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