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3 August 2006


Emcore reduces losses as a result of ongoing consolidation

Component and subsystem manufacturer Emcore Corp of Somerset, NJ, USA has reported revenues for its fiscal third-quarter 2006 (to end-June) of $42.0m (up 2% on the previous quarter and 26% on a year ago). For the nine months to end-June, revenues were up 36% on the previous year, to $123.0m.

For fiscal Q3/2006, gross profit was $8.6m, up 28% from $6.7m a year ago. However, gross margin of 21% was only level with the previous quarter, since fiber gross margins decreased due to increased revenues in the FTTX product
line, which yields a lower gross margin than the division average, according to president and CEO Reuben F. Richards Jr. Gross margins for both photovoltaics and electronic materials and devices increased due to increased volumes, product mix and better yields.

Operating expenses were $13.3m (level with the previous quarter after elimination of a non-recurring charge of $2.7m). This was despite a final restructuring charge of $0.6m related to the City of Industry, CA facility closure. Photovoltaics operations are now entirely located in Albuquerque, NM; annual savings of $3m are expected.

Excluding $1.0m of stock-based compensation expense and the $0.6m facility shutdown costs, operating loss was cut to $4.7m, down from $3.6m the prior quarter (after deducting stock-based compensation expense of $0.9m and loan forgiveness of $2.7m) and $3.4m a year ago (after excluding $1.8m of severance and restructuring expenses).

Net loss was cut to $4.3m, down from the previous quarter's $5.3m (excluding a $2.0m final earn-out payment from the sale of the equipment division in November 2003) and $5.1m a year ago.

Emcore's GELcore joint venture with GE Lighting cut losses from the previous quarter's $0.4m to just $0.1m.

The sale of Emcore's electronics materials and devices division (EMD) to IQE plc for $16.0m (which should be completed by mid-August and aims to "lower Emcore's cost base, improve gross margins company-wide and permit further consolidation of operations") should save about $3m annually, Richards adds.

For fiscal Q4/2006 (to end-September), Emcore expects revenues to rise 10%.

See related item

Visit: http://www.emcore.com