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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated -- Ignore unavailable to you. Want to Upgrade?

To: Apollo who wrote (1005)	7/14/2004 9:12:35 PM
From: tinkershaw	Read Replies (1) \| Respond to of 2955

OVTI is indeed a Royalty play. It appeared to be in a textbook Tornado, it apeared to have sufficient marketshare (2x the next competitor) to be King of its marketspace of CMOS image sensors, particularly as to cellular phones. Also, the market is far from mature as the resolution continues to move to higher resolution while maintaining smaller and smaller form factors. Meaning, a sort of temporary Moore's law sort of deal at work. What appears to have happened is that the market has become very concerned about Micron's entry into this marketplace and that it will start a huge price war, cutting out margins completely. This, along with the late filing of the 10-K which was just filed. As for valuation, according to Yahoo! OVTI is presently selling for 7-8x consensus 1 yr ahead estimates. Meaning, either the market does not believe that these estimates are even close to reality, or it is panicking and overreacting in a big way. Unfortunately, at this point in time, I don't know which way is which so I sold out at around $16. Looking at it, if the market is overreacting, it is really overreacting and could be an easy quadruple from here if it is. What I am seeing overall is that the market, and the news, is making the case that the semiconductor cycle has peaked. It is using lower margins, and higher inventory levels in certain sectors to make this conclusion. Intel would be the template for this analysis. However, I do think the market is overeacing to the semis in general. Whether or not that also applies to OVTI I don't know, as OVTI has been disproportionally hammered. I am starting to see some semis getting really hammered, INTC included, whether or not it is justified depends on the semiconductor cycle, and I do not think it has peaked. Perhaps it is fear of China flooding the market with new DRAMs. Either way, companies like IRF and INTC are starting to become more interesting to me again. OVTI I have less sense on, is there something catastrophic at work? I do not know. Probably not, but I just don't know. Tinker