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OIIM: Company Pre-Announces Stronger than Expected Q4 Revenue and Gross Margin

By Lisa Thompson


Business is improving at O2Micro (NASDAQ:OIIM) even faster than expected due to particularly good orders in power management and high-end televisions. Today the company raised both the revenue range and gross margin guidance for the fourth quarter just closed on December 31, 2016. It is now telling investors to expect revenues to be reported in the range of $15.4 to $15.9 million rather than the previous range of $14.7 to $15.6 million. Using the midpoints of these ranges this is an increase of $500,000. The gross margin guidance is now a range of 53-55% versus the previous estimate of 50-52%, significantly higher. In Q3 2016, the gross margin was 52.6%.

In the last conference call the company indicated its current cost structure shows cash breakeven at $15.5-16.5 million in quarterly revenues and profitability breakeven is now at $17 to $18 million. So with this new guidance, the company may well have achieved cash breakeven in Q4 2016. At quarter end, the company had $53.1 million in cash and equivalents (or $2.07 per ADS.)

Last year the company reported Q4 on January 27, 2016, so we expect it might report earnings on the morning of January 25
th this year with a 9AM conference call.

Updating the Q4 2016 Forecast

For Q4, the mid-point of the range is now $15.7 million in revenues versus $13.4 million, up 17%. Using higher revenues and higher gross margins we are raising earnings estimates. On a GAAP basis we are now looking for a loss of $0.04 versus a loss of $0.50 last year. Non-GAAP EPS could be a loss of $0.02 versus a loss of $0.10 per share last year. Most important to investors would be cash flow break even. The company only reports its cash flow statement on an annual basis so management will have to tell us if they achieved that in Q4 2016.


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