OmniVision Technologies Shares Jumped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of camera-chip designer OmniVision Technologies (NAS: OVTI) are having the good kind of Kodak moment, following Tuesday's 20% jump with a 12.6% surge in intraday trading today.

So what:OmniVision shares have suffered lately as investors feared that Apple (NAS: AAPL) might buy its iPhone 4GS -- nee iPhone 5 -- camera chips from Sony (NYS: SNE) instead. The actual product presentation gave us enough clues to pin the new phone to OmniVision's lapel, but that fact is taking some time to sink in.

Now what: As explained in separate analyst notes by Wedbush Morgan and Oppenheimer today, the specifications of the new iPhone's camera line up with existing OmniVision chips but not with anything that Sony has to offer, making the Japanese powerhouse a highly unlikely supplier this time. If you pardon my French, this has been blatantly obvious for quite a while. The synthetic long position I opened when OmniVision fell 30% is now firmly in the money -- and the real jump hasn't even happened yet. Just wait until the iPhone 4GS hits store shelves so analysts can rip it apart and actually find OmniVision camera chips inside.

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At the time thisarticle was published Fool contributor Anders Bylund owns shares of OmniVision Technologies, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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