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6 March 2009


Kopin grows profit in Q4 despite 8% drop in III-Vs revenues

Kopin Corp of Taunton, MA, USA, which makes III-V heterojunction bipolar transistor (HBT) epiwafers and CyberDisplay LCDs, has reported revenue growth of 17% from $98.1m in 2007 to a record $114.8m in 2008 (with GaAs RFIC maker Skyworks Solutions Inc of Woburn, MA comprising 29% of revenue). Fourth-quarter revenue of $29.1m was down 5% on $30.7m last quarter but still up 1% on $28.9m a year ago.

“We posted record top-line results in 2008, paced by strong sales of military display products,” says president & CEO Dr John C.C. Fan. Displays revenue grew 24% from $54.6m in 2007 to $67.8m in 2008, including $18.2m in Q4 (down 4% on $18.9m last quarter but up 9% on $16.7m a year ago), with reduced revenue from lower-margin consumer electronics applications such as low- and mid-range digital still cameras and camcorders compensated by increased revenue from higher-margin military and certain consumer electronic applications.

III-V product revenue grew 8% from $43.6m in 2007 to $47m in 2008. “Our III-V product line grew modestly in 2008, despite the effects of the economic downturn on the wireless handset market,” Fan says. However, Q4 revenue of $10.9m is down 8% on $11.8m last quarter and 11% on $12.2m a year ago, reflecting the deteriorating macroeconomic conditions.

“Despite the global economic slowdown, we are delighted that we achieved many of our 2008 objectives,” says Fan. Gross margin grew from 16.5% in 2007 to 27.5% in 2008, including 27.8% for fourth-quarter 2008 (up from 20% a year ago), reflecting the higher sales of military displays.

Compared with a net loss of $6.6m for 2007, net income in 2008 was $2.6m. This included $1.8m in Q4, up from $0.3m a year ago and $1.5m last quarter. This was despite R&D expenses rising from $11.5m in 2007 to $16m in 2008 from developing high-resolution displays and new III-V products.

During 2008, Kopin’s cash and marketable securities grew by $6.7m to $100m. “Our strong cash position is key to our competitive advantage,” says Fan. With no long-term debt, in December the firm’s board of directors approved a program to re-purchase up to $15m of its common stock.

In 2009, Kopin expects revenues from military display products to continue to grow as part of its strategy of focusing on higher-margin products. However, the global economic slowdown is expected to result in lower revenue for commercial and industrial products.

“Coming off a year of record revenue, we remain optimistic about the opportunities ahead, despite the challenging environment,” says Fan. “During this economic slowdown, we observed a very strong shift to more advanced handsets - 3G and even 4G handsets, especially in China,” he adds. “We continue to believe that our unrivaled wafer and manufacturing experience and strong experience and expertise with III-V technology such as indium gallium phosphide (InGaP) represent important advantage for Kopin as new handset standards are being installed worldwide,” says Fan. “We are confident that we can use our established manufacturing expertise, solid base of top-tier customers, strong cash position, and relentless technology and product innovation to emerge from this downturn as an even stronger leader in the markets we serve.”

See related item:

Kopin reports record revenue, despite III-Vs weakening

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