Slowdown Evident in Top-Line Guidance, Reiterate Hold

2/29 - "OmniVision reported upside to estimates last night, but guided under consensus in Q1, reflecting what we believe is weaker-than-seasonal demand for handsets in China. However, mix benefit derived from shipping less low-end China product is mitigating EPS impact and keeping us at a HOLD rating for OVTI shares...Management guided Q4/F2008 revenues in the range of $170-190 million and non-GAAP EPS between $0.27 and $0.40. First Call estimates for FQ4 were $193.6 million and $0.32, while we had $210 million and $0.38."

"We are lowering our estimates...Revenue: Q1/C2008E (Apr) from $210 million to $180 million; C2008 from $901 million to $800.0 million. EPS: Q1/C2008E from $0.37 to $0.33; C2008 from $1.60 to $1.47...Price target remains $13. OVTI's price target of $13 is 8.9x our C2008 EPS estimate of $1.47. This is a discount to a 15.0x multiple for our coverage universe."

""OmniVision saw strength in demand for the new Omnipixel 3 HS sensors, but was offset by seasonal slowing toward the end of the quarter. The emerging products segment was down from last quarter due to a change in mix, while handsets grew due to strength across multiple resolutions. Management also believes it is gaining share in handsets, particularly in North America."