Event Brief of Q2 2007 Omnivision Technologies Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

PARTICIPANTS

. Shaw Hong, OmniVision Technologies, Inc., CEO, President . Peter Leigh, OmniVision Technologies, Inc., CFO . Jennifer West, Merriman Curhan Ford & Company, Analyst . Adam Benjamin, Jefferies & Company, Analyst . Harsh Kumar, Morgan Keegan & Company, Analyst . Jason Gold, OmniVision Technologies, Inc., Corporate Spokesperson . Jess Lee, OmniVision Technologies, Inc., VP Mainstream Products . Jason Pflaum, Thomas Weisel Partners, Analyst . Paul Coster, JPMorgan Chase & Company, Analyst . Satya Chillara, Pacific Growth Equities, Analyst

. Kent Shaw, Buckhead Capital, Analyst . Quinn Bolton, Needham & Company, Analyst . David Wu, Global Crown Capital, Analyst . Tore Svanberg, Piper Jaffray & Company, Analyst . Bill Bonton, Endocino Capital, Analyst . Hasan Gadjali, OmniVision Technologies, Inc., VP Advanced Products

OVERVIEW

OVTI reported 2Q07 revenue of $137.7m and net income of $5.4m or $0.10 per diluted share. The Co. expects 3Q07 revenue to be $135-145m and diluted EPS to be $0.05-0.12.

FINANCIAL DATA

A. Key Data From Call 1. 2Q07 revenue = $137.7m. 2. 2Q07 net income = $5.4m. 3. 2Q07 diluted EPS = $0.10. 4. 2Q07 GM = 33.1%. 5. 2Q07 DSO = 50 days. 6. Inventories, net of reserves, at the end of 2Q07 = $103.7m. 7. Cash and short-term investments at the end of 2Q07 = about $350m. 8. 3Q07 revenue guidance = $135-145m. 9. 3Q07 diluted EPS guidance = $0.05-0.12.

PRESENTATION SUMMARY

S1. 2Q07 Business Review (S.H.) 1. Management Change: 1. James He, COO, was appointed to the Board of Directors. 2. 2Q07 Highlights:

1. Revenue was about $138m. 2. Earnings were $0.10 per share.

3. Excluding stock option expenses, litigation settlement

accrual, and related tax effects, non-GAAP earnings were $0.28

per share. 4. Balance sheet at the end of 2Q07 remains strong.

1. Cash and short-term investments totaled about $350m. 2. No debt. 5. Volume of image sensors shipped increased 12% sequentially due primarily to increased demand for handsets. 1. Units are at an all time high. 6. Continuing to develop new technology for all of OVTI's markets. 7. Introduced the sixth-generation 1.3 megapixel image sensor in a 1/5-inch optical format.

1. Being well received by tier 1 customers. 8. Multiple design wins in handsets and notebooks. 9. Introduced OmniVision CameraChips.

10. Began taking the necessary steps to [relieve] chip scale

packaging constraints. 1. Goals are to have the first line of equipment in place before the end of the calendar year and to have the second line of equipment in place by July of calendar 2007.

2. On track to accomplish this goal with the first line in the

early stages of ramping up. 11. Unit volume in the mainstream products business grew significantly. 1. Shipped the first sample of sensors based on the Wavefront Coding technology. 2. Received good feedback from customers. 3. Working internally to optimize the technologies. 4. Believes optimizing the technology will push out the realization of [first qtr.] revenues. 12. Launched the sixth-generation 1.3 megapixel CameraChip sensor, OV9660.

13. Introduced a 1.3 megapixel solution on the OmniPixel2

architecture. 3. Advanced Products: 1. Now in four of the top-five notebook manufacturers. 1. OV9660 is generating interest from portable laptop manufacturers. 2. Introduced OV7720, a high-performance VGA sensor designed on the OmniPixel2 platform. 2. For the evolving security and surveillance market, introduced OV7949. 1. OV7949 has been selected by a major US-based tier 1 customer of commercial grade security cameras. 3. For the toys and games market, working with two of the three largest video game console manufacturers.

1. For both platforms, OVTI is selling its sensors for separate

stand-alone image capture systems that work in conjunction with each systems. 2. Participating in the success of several additional toys with embedded cameras. 4. Has high expectations about the automotive market. 1. In mass production of sensors for domestic and European auto manufacturers. 2. Began working with two new OEM customers. 5. For the medical market, OV6920 is being designed into many applications. 1. Believes lead time in this market can be lengthy due to several reasons, most of which are related to the safety and regulatory issues. 2. Expects to receive revenue from this market in 2007 with more significant volumes in 2008. 3. Believes over the long run, there is tremendous number of opportunities for the sensors. 4. Profitability: 1. There are three areas which OVTI is emphasizing to improve profitability:

1. Working diligently with the supply chain to ensure that the

Co. is operating under the most cost effective model. 2. Continue to introduce new technologies. 3. Continue to work with customers.

2. Believes that by focusing on these three areas, OVTI should be able to return to an improving operating model.

S2. 2Q07 Financial Review (P.L.) 1. Highlights: 1. Revenue was $137.7m, up slightly from 1Q07 and up 9% on a YoverY basis.

1. Approx. 85% of revenue came from mobile handsets vs. 80% in

1Q07. 2. Just under 5% came from digital still camera OEMs vs. approx. 10% during 1Q07. 3. About 10% of business in 2Q07 and 1Q07 came from advanced products. 2. Numbers for end user market revenue are necessarily imprecise because OVTI sells to module makers and through distributors. 1. Has updated 1Q07 data to reflect new information. 3. Direct sales to OEMs and VARs accounted for about 63% of revenue with the balance of 37% coming from sales through distributors. 4. Shipped approx. 65m image sensors, increase of about 12% from approx. 58m units shipped in the July qtr. 5. Blended ASP was $2.12, down $0.23 from $2.35 in 1Q07. 1. Largest contributing factors of the decrease was the change in the overall volume and revenue mix, in particular, the largest share of VGA sensors in unit and dollar volume. 6. GM was 33.1% vs. 36.3% in 1Q07. 7. Gross profit reflects approx. $1m of stock-based compensation expense vs. $0.9m in 1Q07.

8. Gross profit includes $1.6m of compensation from a supplier

whose product quality in previous periods did not meet OVTI's

quality standards. 1. In the prior period, gross profit included $2.2m for similar issues. 2. Decline in GM in the Oct. period was primarily the result of the shift in product mix together with pricing pressure. 9. R&D expense was $18.7m, up from $16.8m in 1Q07. 1. R&D expense includes approx. …