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18 August 2009


Satellite deals boost Emcore amid $27m write-down

Fiber-optic and photovoltaic component supplier Emcore is hopeful that the worst of the recession is over, after seeing revenues slip to $38.5 million in its latest financial quarter.

For the three months that ended on June 30, the New Mexico company recorded a net loss of nearly $46 million, although that figure was compounded by a $27 million write-down in the value of some of its assets relating to the fiber-optic half of the business.

However, with CEO Hong Hou confident that the slump in the fiber-optic sector has now bottomed-out, and strong order momentum for solar cells to be used in satellite applications, things now appear to be looking up.

“It is clear that demand is now starting to come back,” said Hou, referring to the fiber-optic segment specifically. The CEO also pointed out that a book-to-bill ratio of 1.3 heralded an upswing later in the year.

Revenues from Emcore's solar business jumped 8% sequentially in the June quarter, with the accompanying order backlog swelling by 83% to $36.2 million.

That is largely due to a raft of new, multi-year supply deals with major satellite contractors including Boeing, NASA and the US Air Force Research Laboratory. Those deals are ultimately expected to rake in some $100 million in revenues overall, while the relaxation of certain US export restrictions means that Emcore is now free to target “friendly” nations with its satellite components.

As a result, Emcore is now talking with European aerospace companies and says that it is making significant headway towards cementing new supply deals.

On the terrestrial solar side, Emcore's concentrated photovoltaic (CPV) business still faces two huge challenges: making the technology appear cost-competitive with rival thin-film approaches; and overcoming the risk-averse nature of the energy business.

In what remains a difficult financial environment, the latter problem means that any new technology such as CPV is still viewed as a risk rather than an opportunity.

As a result, Emcore is tweaking its strategy in the CPV systems business. Rather than ship entire systems and developing large-scale solar projects, it will now seek to license key parts of the systems, such as its tracker technology, to partners.

As a result, the only products that it will need to ship over long distances would be CPV modules, which ought to mean much lower total shipping costs.

Hou said that Emcore was pursuing a joint-venture agreement in China, where it hopes to cash in on the Chinese federal government's policy on renewable energy production. In particular, it sees an emerging opportunity for its third-generation CPV systems, which are nearing the end of development.

The company also filed an S-3 registration form with the US Securities and Exchange Commission (SEC) during the quarter, under which Emcore can seek to raise up to $50 million through either debt or equity financing.

For the forthcoming quarter, Emcore's management is expecting revenues to remain flat or increase slightly, to between $38 million and $42 million.

See related items:

Emcore sees late-quarter pick-up in demand

Emcore’s growth in PVs tempers optical communications slump

Emcore revenues shrink 20%, driven by PV order push-outs

Emcore grows 70% year-on-year

Search: Emcore Solar cells CPV systems


The author Michael Hatcher is a freelance journalist based in Bristol, UK.