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OIIM: Sales to TV and Smartphone Customers Expected to Ramp in Second Half

01/31/2018
By Lisa Thompson

NASDAQ:OIIM

O2Micro (NASDAQ:OIIM) reported Q4 2017 revenues of $15.2 million, within the range of guidance but slightly below the midpoint. This was down 4% from last year and broke the company’s string of five straight quarters of revenue growth. Guidance for revenue for the first quarter of 2018 is sequentially down 2-8% in keeping with its normal seasonality. The midpoint in revenue guidance would be down 5% from a year ago. The company expects an accelerating second half as sales to Chinese smartphone and TV makers ramp. In smartphones, volumes will leap as the company’s second-generation product for fast charging will become available. To date TV makers have seen increased panel availability but have been hurt by a silicon shortage restricting production, however this shortage should lessen by then. After a decline in LCD TV sales in 2017 of 4%, WitsView expects units to increase in 2018 by 3.9% to 218 million units. In addition, global sales of TVs over 75 inches should grow from 1.15 million units in 2016 to 3.3 million in 2020 according to IHS Market. Both of these forecasts point to better sales for O2Micro after a lackluster market in 2017.

The company continues to project cash breakeven at $15.5 - 17 million in quarterly revenues and profitability at $17-19 million. Expenses in Q1 2018 should be similar to Q4 2018 and with lowered revenues in Q1 we expect losses will be up sequentially.

Gross margin was 50.5%, up sequentially (from 50.3%) but down year over year (from 54.1%) after an abnormally strong Q4 in 2016.

Operating expenses in the quarter were $9.4 million versus $9.0 million last year and $9.5 million in Q3 2017. 

Operating losses increased to $1.8 million in 2017 from $0.4 million, clearly going in the wrong direction and even up sequentially as revenues declined. 

Non-GAAP net income was a loss of $1.5 million versus a gain of $385,000 last year, but last year included a currency gain of $367,000. The company reported non-GAAP EPS loss of $0.06 versus a gain of $0.01 last year. 

At December 31, 2017, the company had $46.1 million in cash and equivalents (or $1.80 per ADS.) The company expects to be cash flow breakeven in the second half of this year, but not for the full year.


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