Monday, February 12, 2007

Calls of Note Part 6

- JP Morgan comments on OmniVision (NASDAQ:OVTI) saying the Wavefront Coding technology is potentially disruptive digital imaging technology. Recently viewed as a 'science experiment' OVTI appears to have made the technology commercially feasible and announced its availability today. The announcement of its availability at 3GSM could buoy the stock, however it is unclear how soon it will impact revenue and earnings.

Omnivision introduced the TrueFocus(tm) technology based on patented Wavefront Coding(tm) with a 3MPx module. TrueFocus offers point-and-shoot image capture where the image is always in focus. This is potentially disruptive technology because it eliminates the need (and cost
of) mechanical focus technology in a low-cost mobile handset.

This appears to be a major step forward. Omnivision de-emphasized discussion of this technology in 2006, so either the company has made a technical break-through in recent months, or management felt it necessary to shroud the finished product in secrecy for commercial purposes. However, it remains unclear whether OVTI is in mass production, or has landed any customers yet, so there remain risks.

'OVTI also launched a 5MPx autofocus module at 3GSM. This is potentially good news too, however the firm has seen limited adoption of its 2MPx solutions to-date, so there is no guarantee that the market will transition to even higher resolutions in 2007. Nonetheless, OVTI claims the product is in mass production, in development with customers, and will begin shipping soon.

Maintains Neutral.

Notablecalls: Fundamentally good points highlighted by JP Morgan. NC turned positive on OVTI couple weeks ago (see archives). Looks like it's starting to pay off now.

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