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2 November 2009


AXT grows 28% as end markets continue recovery

For third-quarter 2009, AXT Inc of Fremont, CA, USA has reported revenue of $16.8m. Although down 6% on $17.9m a year ago, this is up 28% on $13.1m last quarter due to the continued recovery in end markets, coupled with ramping volumes for newer qualifications.

Specifically, gallium arsenide (GaAs) substrate revenue was $13.3m, down 2% on $13.6m a year ago but up 32% on last quarter’s $10.1m due mainly to the overall increased demand in all diameters (particularly 6-inch).

Raw materials sales of $1m were flat on last quarter and down from $3m a year ago, as excess inventories are not expected to clear until late 2009. Indium phosphide (InP) substrate revenue of $688,000 was also roughly level with last quarter ($684,000), but up 42% on $484,000 a year ago. Germanium (Ge) substrate revenue of $1.8m is up 50% on last quarter’s $1.2m and more than double $795,000 a year ago.

Gross margin has continued its recovery, up further from 19.3% last quarter to 32.9% (and above 25.4% a year ago). Operating expenses of $3.7m were roughly level with last quarter’s $3.8m, after being cut from $5.5m a year ago.

“Improved margin performance, manufacturing efficiency and cost control allowed us to exceed our earnings expectations and return the company to profitability,” says CEO Dr Morris Young. Compared with an operating loss of $0.9m a year ago and $1.3m last quarter, income from operations was $1.9m. Net income was $2.1m, compared with a net loss of $1.3m last quarter and $1m a year ago. During the quarter, cash and equivalents (including restricted deposits) rose from $33.6m to $37.8m.

“We are very pleased to see continued diversification of our customer and revenue base as well as many positive trends in our markets that highlight our competitive advantages and are likely to provide further growth opportunities in the quarters ahead,” says Young.

For fourth-quarter 2009, AXT expects revenue to rise to $17-17.5m and net income per share to be $0.03-0.05.

AXT has also announced three executive promotions

Raymond Low, formerly VP, corporate controller & acting chief financial officer, has been appointed VP & chief financial officer.

AXT co-founder Davis Zhang, formerly president of joint venture operations, has been appointed president of AXT China Operations, with responsibility for managing and developing AXT’s joint venture operations, as well as assisting Young with the management of AXT’s manufacturing facilities in China.

Bob Ochrym, formerly VP of business development, has been appointed VP of business development, strategic sales & marketing, with responsibilities including sales for the North American East Coast, as well as for Europe. He will continue to work closely with John Cerilli, VP of global sales and marketing, to maximize customer support around the world. He will also be responsible for developing sales and marketing strategies, major sale contract negotiations, major market identification and other strategic sales and marketing functions.

“Each of these individuals has made significant contributions to AXT, and I am looking forward to further leveraging their talents in expanded roles,” says Young.

“Davis has been instrumental in the success of our joint venture program and his knowledge of our business and customer needs make this new position a natural fit,” Young says. “By bringing together two critical functions of manufacturing and joint venture operations, we can better plan and respond to the present and future needs of our customers,” he adds.

“Bob has a wealth of contacts and experience in our industry and we are excited to leverage his knowledge to further enhance the reach and success of our sales and marketing efforts,” Young says. “We have great opportunities to grow our market share with a number of the customers that we currently serve as well as with new customers that we do not presently supply. Further, we are continuing to explore new applications for our products in wireless devices, LEDs and photovoltaics that expand our addressable market and provide further opportunity for growth,” he adds.

“Raymond has a strong financial background and a deep understanding of our financial structure, which has allowed him to transition smoothly into his permanent role as our chief financial officer,” concludes Young.

See related items:

Young takes over as AXT sees improving market conditions

AXT’s sales halve as GaAs inventories burn off

AXT’s chairman & CEO Yin steps down

AXT’s revenue falls 13%, as GaAs sales drop by a third

Search: AXT GaAs GaAs substrate InP Germanium


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