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18 February 2009


Rubicon’s revenue falls by two thirds quarter-to-quarter

For full-year 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 $37.8m (up 11% on 2007's $34.1m, driven by sales of larger-diameter substrates). Net income was $4.3m, compared to 2007’s loss of $2.9m.

However, fourth-quarter 2008 revenue was $4m, down 58% on $9.5m a year ago and 66% on last quarter’s $11.8m. The dramatic drop is attributed to the slowdown in consumer spending, particularly in electronics (where much of Rubicon’s products are used). “The LED market continued to soften throughout the fourth quarter,” says CEO Raja Parvez. Net loss was $1.8m, a slight improvement on $2m a year ago.

Previously, in mid-September, Rubicon had 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 silicon-on-sapphire (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.

Subsequently, in early December, Peregrine's obligation to purchase material from Rubicon in 2008 and first-half 2009 was replaced by a multi-year agreement under which Peregrine committed to source at least 50% of its sapphire purchases from Rubicon through 2011. “This amendment to our agreement provides some relief to our customer as they work through their inventory,” said Parvez at the time.

During Q4/2008, Rubicon not only repurchased about 731,000 shares under its share repurchase program (at a total cost of $3.1m) but also purchased $2m in preferred equity in Peregrine. Year-end cash and investments totaled $58m, and Rubicon has no debt.

“It may take another quarter or two for inventory levels throughout the supply chain to realign and for orders to pick up again,” says Parvez. “The first quarter will be challenging, with reduced LED orders as inventory levels come down.” For Q1/2009, Rubicon expects a net loss of $3-4m on revenue down 25-50% on Q4/2008 to $2-3m.

“Rubicon’s products are integral to several emerging technologies and demand will resume when supply chain inventory levels are reduced,” says Parvez. “We also believe we can build on the success of our growing optical business with new applications in new market segments that require high-quality sapphire in large diameters,” he adds.

“In the meantime we continue to monitor costs very closely and have adjusted staffing levels and production schedules accordingly,” says Parvez. “Our strong balance sheet allows us to continue to invest in advancing our technology, in projects that will lower our costs, and in improving our capital structure through our share repurchase program,” he adds. “Until we have further clarity on the longer-term outlook for our product sales, we believe it’s prudent to refrain from giving full year estimates,” he added.

See related items:

Rubicon amends Peregrine agreement to provide relief

Rubicon slashes Q4 revenue guidance; expects loss

Peregrine cuts off sapphire deliveries due to falling consumer electronics demand

Search: Rubicon Sapphire substrates Peregrine