By Lisa Thompson

NASDAQ:OIIM

READ THE FULL OIIM RESEARCH REPORT

Customer inventory buildups and lithium-ion battery shortages continue to impact sales at O2Micro (NASDAQ:OIIM). The company expects this to continue through Q4 and possibly into Q1 and as a result, expects another down quarter in Q4. We expect the company to remain cash flow neutral at worst.

For Q3 2022, O2Micro expects revenues between $16 million and $19 million or a midpoint of $17.5, which is down sequentially, and a decline of 28% year over year. The decline should be mostly in battery management but TV backlighting products are caught up and could be impacted. With better backlighting product availability, improving supply chains, and the ability to ramp up in the automotive market with its newly available supply, the company is optimistic about 2023. The company is particularly excited about new products for DMS (Drive Monitor System) which the company expects to become an industry leader and now selling to module makers. Now the biggest worry is the global economy and consumer demand—something no one can predict.

Based on company guidance, which tends to be close to results a quarter out we are lowering Q4 revenues and earnings and thus the 2022 year. We now look for 2022 revenues of $79.3 million and a non-GAAP ADSPS of $0.14.

O2Micro Privatization for $5.00 per ADS in Cash is On Track

O2Micro has announced it has agreed to be bought for $5.00 per ADS in cash. The company will then be a private entity. The buyers are FNOF Precious Honour Limited, Sterling Du, CEO, and Chairman of the Board, and Perry Kuo, CFO, and director.

The merger will be funded through a combination of a cash contribution from the sponsor pursuant to an equity commitment letter, debt financing to be provided by Credit Suisse AG, Singapore Branch, and equity rollover by the management and other rollover shareholders of all shares and ADSs they beneficially own.

The transaction is expected to close during Q1 2023 and is subject to customary closing conditions, and will need shareholder approval of 2/3s of the votes. The acquirers currently have approximately 16.9% of the voting rights.

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