Successful corporate turnarounds can substantially increase shareholders’ wealth and there are enough examples in the recent past of such fundamental improvements in operations. OmniVision Technologies, Inc. (NASDAQ:OVTI) is one such company and encouraging developments at Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) and Nuance Communications Inc. (NASDAQ:NUAN) indicate these may be next in line. Here is a closer look:
Research In Motion Recovery in Stocks This Year
Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) is not a company which is seen in an overly positive light nowadays. This is warranted given the disastrous experiments the company’s management engaged in over the last couple of years. However, there has been a smart recovery in the stock this year after increasing signs of management sanity prevailing at the Waterloo headquarters of the embattled company. BlackBerry has announced plans to offer BlackBerry Messenger (BBM) on iOS and Android from mid-2013. The move will catapult BBM, which has remained in the confines of BlackBerry devices so far, into competition with other messaging services such as WhatsApp.
The messenger is one of the solid successes of BlackBerry and continues to draw strength from its customer base of 60 million monthly users. Among other positives is the announcement of AT&T Inc. (NYSE:T) offering BlackBerry’s new Z10 touchscreen smartphone, making the operator second to do that after T-Mobile USA, Inc. (TMUS). Another example of spot on decisions coming out of Waterloo is pulling out of Japanese market, where rolling out new services is getting increasingly costly. As a result, it is no wonder to see Lenovo getting interested in acquiring BlackBerry although nothing in this direction has come except a stray statement from a Lenovo chief executive. In terms of financial performance, the company continues to report lower sales, but they did swing to a small profit of $98 million in the latest quarter on sales of $2.7 billion.
Nuance Headway in Automotive Industry
Nuance Communications Inc. (NASDAQ:NUAN) is a developer of voice and language software solutions. The company’s softwares are used across a range of industries including healthcare, mobile, consumer, enterprise customer service, and imaging. The stock has seen great variation this year with a trading range of $18 - $25.89 while currently trading at the lower side of the range at $19. Poor financial performance in recent quarters means its price equity ratio stands rather high at 41.4 for the trailing 12 months, but the metric falls to 12.4 on a forward basis. As good news, Nuance Communications has made some headway in the automotive industry. The company has won contracts to supply its next generation speech recognition technology for BMW and Toyota vehicles. These are companies which make the finest and most sold vehicles in the world respectively. As it is evident, there is limited downside in Nuance stock. On the flip side, Nuance has announced a $500 million stock repurchase plan which will only boost its earnings per share.
Image Sensors Come to Rescue OmniVision
OmniVision Technologies, Inc. (NASDAQ:OVTI) is an image sensor technology company whose products can be found in mobile phones, notebooks, webcams, digital still cameras, security and surveillance products, and automobiles. This wide array of applications makes it a fairly diversified player which makes it easy to spread the risk of revenue drop from once industry. As of now, the company is seeing better sales and margins. In the three months ended January 31, OmniVision’s revenues more than doubled to $423.5 million from $185.2 million in the same period last year. This jump in sales trickled to bottom-line as well as profits zoomed past most optimistic expectations to $21.3 million. This virtually debt free company trades at just a premium of 29 percent to its book value. A conservative forward price earnings ratio of 11 justifies the positive reviews by analysts.
This is interesting to note that OmniVision Technologies, Inc. (NASDAQ:OVTI) was trading dangerously close to its 52 week low in April but has shot up after quarterly results, in an indication of just how quickly things change here. Research in Motion and Nuance Communications Inc. (NASDAQ:NUAN) are at a stage where OmniVision was a couple of months back. Fundamentally, operations at these companies are improving which may be seen in the quarters to come.