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12 July 2007


Emcore revenues rise, but terrestrial solar development costs increase losses

Component and subsystem maker Emcore Corp of Albuquerque, NM, USA has reported revenue for its fiscal second-quarter 2007 (to end March) of $39.7m (up 10% on $36.1m a year ago from continuing operations and up 3% from $38.5m the prior quarter), as the firm reported in brief at the end of April.

Fiber Optics revenues were $26.2m (up from $25.9m a year ago and $25.3m the prior quarter). Despite revenue in the digital fiber-optics sector dipping due to customer inventory management, Emcore is seeing a sustained significant rise in demand for CATV products (expected to continue throughout fiscal 2007).

Photovoltaics revenues were $13.4m (up only slightly from $13.2m the prior quarter, but up as much as 30% from $10.3m a year ago).

Excluding a one-time $1.2m inventory charge associated with certain legacy products in the digital fiber-optics sector, gross profit was $8.1m (up on $7.9m a year ago from continuing operations and $6.4m the prior quarter). After falling from 22% a year ago, gross margin has recovered from 16% last quarter to over 20%. Fiber Optics gross margin has continued to fall, from 25% a year ago and 22% last quarter to 20% (due to unabsorbed fixed overhead as a result of reduced digital fiber-optics revenue). However, Photovoltaics gross margin was 20%, up from 14% a year ago and 7% the prior quarter due to increased revenue and favorable product mix.

Operating loss has risen from $7.9m a year ago to $9.3m. In addition, this excludes $2.3m of professional fees incurred from the firm’s review of its historical stock option grants and about $2.5m of development costs for the new terrestrial solar power division. Emcore expects to complete the second generation of its solar power concentrator system in the second quarter and to transfer system development to production in the December quarter.

Cash reserves fell by $9.9m during the quarter to $77.1m at the end of March, mainly due to the fees from its review of stock option grants, legal costs of the firm’s patent infringement lawsuits against Optium Corp, and various increases in net working capital requirements.

Emcore expects a much stronger fiscal second half year, based on increased strength in CATV and Broadband product lines. “This quarter, revenues from our datacom and telecom sectors are returning to business levels of last year and we continue to see strength in our photovoltaics business for both the satellite and terrestrial markets,” says CEO Reuben F. Richards Jr. Emcore forecasts revenue for fiscal Q3 (to end June) of more than $44m (up 11% sequentially) and for fiscal Q4 (to end September) of $46-47m. The firm has also raised its guidance for fiscal 2007 revenue to $170m.

“We expect corresponding improvement in profitability to reach EPS [earning per share] in mid-2008,” adds Richards.

See related items:

Emcore begins shipping products from its China plant

Emcore achieves 31% efficiency for new space solar cells

Emcore’s dip in fiber-optic revenues compensated by growth in CATV and PVs; wins JPL Mars rover contract