15 November 2011

Rubicon’s revenue falls less-than-expected 22% in Q3

For third-quarter 2011, Rubicon Technology Inc of Bensenville, IL, USA, which makes monocrystalline sapphire substrates and products for the LED, RFIC, semiconductor and optical industries, has reported revenue of $33.6m (up 64% on $20.5m a year ago but down 22% on $43m last quarter). However, this is at the high end of the $28–34m guidance.

“Although overall substrate demand from the LED market declined in the third quarter, major LED chip manufacturers continue to focus on migrating to larger-diameter substrates in order to gain efficiencies,” says president & CEO Raja Parvez. “As a result, we had strong growth in revenue from our 6-inch polished wafers [by 79%, from $13.9m last quarter to $24.9m], which helped to compensate for reduced orders of 2- through 4-inch sapphire cores,” he adds.

However, driven by a favorable product mix and higher-than-anticipated pricing on 2- through 4-inch cores sales, gross margin was 48%, above the 40–45% guidance but down from 63% last quarter and 54% a year ago. Net income was $8.2m ($0.35 per diluted share), down from $9.9m ($0.41 per diluted share) last quarter and roughly back to the $8.3m ($0.35 per diluted share) of a year ago.

During the quarter, Rubicon repurchased about 425,000 shares of its common stock at an average price of $12.90 per share (for about $5.5m in total, leaving $19.5m authorized for future repurchases under the $25m program announced last quarter). Cash and short-term investments fell from $83.5m to $72.6m.

“Previously, we had anticipated improved demand for sapphire products by the end of the third quarter,” says Parvez. “However, we now expect to see continued softness in the LED market at least through the fourth quarter,” he adds. “Although inventory levels at our customers are in decline, there continues to be excess inventory throughout the supply chain, limiting our visibility on future orders for 2- through 4-inch sapphire cores. As a result, we expect prices for those products will decline further in the fourth quarter,” he adds.

“Additionally, the prolonged weakness in the LED market could also impact 6-inch polished wafer volumes and pricing, making projecting fourth quarter results particularly challenging,” he continues.

As a result of these challenging market conditions, for Q4/2011 Rubicon expects revenue to fall 36% to $20-23m, gross margin to decline to the low- to mid-30% range, and diluted earnings per share (EPS) of just $0.07-0.10.

See related items:

Rubicon’s Q2 revenue driven by 62% growth for 6" sapphire

Tags: Rubicon Sapphire substrates

Visit: www.rubicon-es2.com

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