Tech

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

It was only a matter of time before InvenSense Inc. got added to the list of suppliers caught out by losing orders to Apple Inc.

Shares of Imagination Technologies Group Plc tanked after it said the maker of iPhones would wean itself off the British company's technology. Dialog Semiconductor Plc also took a dive when an analyst warned of a similar fate.

Then Bloomberg's Alex Webb and Ian King broke the news that Apple would source sensors from Robert Bosch GmbH, in a blow to InvenSense. A sense of deja vu would be understandable when you consider that deja vu is the false sense of having previously experienced something.

Ouch
Shares of Imagination and Dialog both took a hit after news Apple might be developing competing in-house technologies
Source: Bloomberg

InvenSense's stock has a floor under it because the San Jose company is on the cusp of being bought by Japan's TDK Corp. Also different is that while Imagination and Dialog appear to be victims of Apple's quest to become technology independent, InvenSense is merely losing out to a competitor. Replaceable is arguably preferable to redundant.

That said, InvenSense's sale to TDK is indeed fortuitous timing. While InvenSense is one of the best makers of motion sensors around, that doesn't mean much if it can't turn a profit.

Income Generator
InvenSense has struggled to turn its technology into profit
Source: Bloomberg
Note: Dates denote calendar quarters.

Losing a large chunk of business to its biggest client makes the $13 per share TDK is paying look even more expensive. At 4 times sales, InvenSense is already trading well above the 2.97 times average of its peers. TDK might be able to renegotiate the price, but there's only a slim chance of that.

Value Proposition
InvenSense is already expensive versus its peers on a price-to-sales basis
Source: Bloomberg
Note: Shows a selection of sensor makers and is not exhaustive.

Besides, TDK isn't buying InvenSense for its revenue stream -- at least, shareholders had better hope it's not. Instead, what the acquisition brings to the table is a suite of technologies that are set to be even more crucial to a hardware industry on the verge of explosive growth in driverless cars, drones, virtual reality and internet of things.

Reliance
InvenSense reduced its dependance on Samsung as it leaned more heavily on Apple, a sign the company can find new clients
Source: InvenSense

News of this loss of orders to Apple may make TDK think it's buying a lemon. That's not a bad thing so long as the Japanese acquirer knows how to make lemonade.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net