FoxConn Invests in AMBA’s Largest Customer GoPro

December 20, 2012

Terrapin Note- FoxConn announced a huge investment in GoPro yesterday valuing the company at over $2B and likely setting the stage for a high profile IPO in the near future. We see this as a positive for AMBA which counts GoPro as its largest customer, we estimate in the range of 15-20% of revenue, and whose chip technology lies at the heart of the GoPro camera. Given this relationship and associated growth and multiple expansion potential, even at $10 the company remains attractively valued with a $260M market cap and nearly $100M in net cash especially considering GoPro's valuation on an estimated $600M of sales . And AMBA sells to substantially all players in the action camera market except Sony, which uses their own SoC, exposing it to potentially lower competitive risks than GoPro itself. Though as we have noted GoPro has built a powerful consumer brand that will be tough to compete with.

Foxconn Sees Strategic Boost From GoPro Camera-Maker Investment

By Tim Culpan & Peter Burrows - Dec 19, 2012 10:29 PM PT

    Foxconn Technology Group plans to leverage its $200 million investment in Woodman Labs Inc., the U.S. maker of GoPro rugged waterproof cameras, to boost its own product portfolio.

    “We need image-capture technology which would complement our existing display technology,” Simon Hsing, a spokesman for Foxconn’s flagship Hon Hai Precision Industry Co. (2317), said by phone today. “We fully expect to participate in their strategy and future development.”

    Hon Hai, the Taipei-based maker of Apple Inc. iPads and Sony Corp. (6758) PlayStations, bought 11.7 million shares in closely- held Woodman Labs for $17.08 each, giving it a 10.7 percent stake, it said in an exchange statement yesterday. Founded by Nicholas Woodman, the San Mateo, California-based company makes GoPro cameras used by surfers, snowboarders and skydivers.

    Woodman Labs is profitable and Foxconn expects it will have the opportunity to become a supplier for its GoPro equipment, Hsing said. In addition to waterproof and rugged cameras, GoPro sells accessories including batteries, remote controls, head straps and bicycle mounts to fit its devices.

    Foxconn’s purchase, via Hon Hai’s wholly owned Cayman Islands unit Foxteq Holdings Inc., was listed in the filing as a “long term investment,” without elaboration.

    Nicholas Woodman built a following for his wearable cameras when family and friends helped him persuade surf, bike and ski shops to carry the devices in the mid-2000s. Woodman Labs’ 2012 sales will approach $600 million, Bloomberg News reported in October, citing three people with knowledge of its finances.

    To contact the reporter on this story: Peter Burrows in San Francisco at