On its post-earnings conference call, OmniVision said the weaker gross margin in the April quarter reflects the impact of a decrease in sales of previously written down inventory and an increase in inventoryvaluation allowances.
In terms of accounting policies, firms using the last-in, first-out (LIFO) inventory cost valuation are more closely matching costs and prices in an inflationary environment.
Our view is that semiconductor growth rates have compressed to a level such that inventory cycles are not able to drive equity valuation outperformance.
The baseline valuation for an online retailer will probably include the inventory and a capitalization of earnings, revenues, and whatever other key metric is used to value such a business.