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3 November 2008


Rubicon slashes Q4 revenue guidance; expects loss

For third-quarter 2008, Rubicon Technology Inc of Franklin Park, IL, USA, which makes sapphire substrates and products for the LED, RFIC, semiconductor and optical industries, has reported revenue of $11.8m, up just 2% on last quarter (though up 29% on a year ago). Previously, in mid-September, Rubicon lowered its revenue guidance for Q3/2008 from $12.5m to $11.5-12m.

Non-recurring items included $1.3m of contracted research revenue based on milestones met in the development of 8” substrates for the SoS (silicon-on-sapphire) market, and a loss on disposal of assets of $1.2m.

Rubicon was impacted by the significant short-term challenges that many of its customers are facing as a result of the global economic downturn, says CEO Raja Parvez. “The weakness in consumer spending associated with the global economic downturn has significantly impacted our LED and SoS customers,” he adds.

In mid-September, Rubicon announced that, due to the slowdown in handheld device and small-display markets affecting both LED-making customers of its small-diameter (2”) LED wafers as well as its main SoS customer (RF communications IC maker Peregrine Semiconductor Corp of San Diego, CA, USA), it had executed contract modifications that shifted delivery of nearly $7m of product scheduled for 2008 into first-half 2009 (which customers believe the market will begin to strengthen). Subsequently, in early October, Peregrine told Rubicon that it would not take any further sapphire shipments until further notice due to declining demand for its products.

“Our customers have very little demand visibility at the moment, which makes it difficult to project our future revenues,” Parvez says. Fourth-quarter 2008 is expected to be particularly challenging as customers continue to work through their inventory, he adds. September's Q4/2008 revenue guidance of $8-8.5m has now been lowered to just $4-6m, resulting in a $1-2m net loss.

“We are retiring some of our older equipment, which will be replaced by newer, more efficient equipment this year and early next year,” says chief financial officer Bill Weissman. “This initiative will improve our margins by reducing operating costs and increasing throughput.”

In addition, in third-quarter 2008 Rubicon saw very positive signs of the LED industry moving to larger-diameter substrates, which is the firm's greatest strength, according to Parvez. “We are excited by the advancements in the LED industry and about our positioning to address this evolving market,” he adds. “While these are challenging times, we have a strong balance sheet and great relationships in the market, which will enable us to manage through these short-term challenges.”

See related items:

Peregrine cuts off sapphire deliveries due to falling consumer electronics demand

Sapphire substrate market to grow at 21% to $400m by 2012

Rubicon cuts 2008 sales guidance from $47-49m to $41.5-42.5m

Sapphire substrate maker Rubicon grows 40% year-on-year

Rubicon starts producing 8” sapphire for Peregrine

Search: Rubicon Sapphire substrates Peregrine