Himax Jumps on Earnings Beat

People have been saying that virtual reality (VR) will be a revolutionary force more than a decade now, changing how we play games, design products and even interact with the world. The VR industry has largely failed to make good on that promise though, as the first generation of products weren’t just a virtual flop and production delays have marred the current iteration of the technology. But recently that momentum is beginning to show signs of shifting.

Sales of Facebook’s (NSDQ: FB) Oculus Rift appear to be taking off as the company has worked through nearly four months of shipping delays and confusion over the situation. Despite those issues, recent surveys of VR users show that now that the Rift is shipping, it’s gobbling up market share from other VR set makers and sales are taking off, though firm data isn’t available. But there are hints; a former employee of the company recently told The Information that Facebook is working to ship 400,000 units by the end of this year alone.

On a related note, Samsung just made its second generation Gear VR available for pre-order here in the US a couple of days ago.

Another major development for the industry came from Dlodlo, a Chinese VR startup, which just announced that it will begin selling its V1 headset this year. While there’s nothing particularly unique about that in and of itself – you pretty much have to get in line to announce a new headset anymore – the design of this one is radically different.

One of the chief complaints from VR users is that the headset and controls are incredibly clunky to use, making the overall experience much less immersive. What’s groundbreaking about Dlodlo’s technology is that the headset resembles wraparound sunglasses and is four times lighter than the Rift headset. Its 1,200 x 1,200 pixel screen is also a higher resolution.

While Dlodlo’s V1 could pose a challenge to Facebook’s Rift, it will take a while for V1 production to ramp up and, in the meantime, the Rift will likely make advances of its own.

All in all, VR finally looks like it’s ready to take off.

You can see that reflected in Himax Technologies (NSDQ: HIMX), whose shares have shot up by more than 20% since it released its second quarter report on August 11th. Net revenue at the company rose 11.5% compared to the first quarter, hitting $201.1 million and meeting the high end of the company’s guidance range. Net income also totaled $19.8 million, or $0.115 per share and beating the guidance of $0.085 to $0.105.

Sales of panel drivers, which are used in flat panel televisions, made a pretty big contribution to that growth. Small- and medium-sized panel driver sales rose 14%, while large-sized drivers were up 2.8%. Sales of Himax’s non-driver products, which are primarily virtual reality components, shot up by 22.1% and now account for 21% of the company’s total sales.

Himax expects to maintain this pace of growth through the rest of this year and, since it also happens to be a major supplier for Facebook, one can only surmise that Facebook’s Rift will continue gobbling up market share.

Continue buying Himax Technologies up to $15.

Stock Talk

Edward Getchell

Edward Getchell

HIMX seems to be in a death spiral. Is there any reason to hold on?


Jim Pearce

Jim Pearce

Yes. We still believe HIMX is a strong acquisition candidate but there is no way of predicting if/when a bid will materialize so attempting to time when that might happen could result in missing out altogether.

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