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30 July 2007


Veeco’s booming HB-LED equipment sales compensate for data storage slump

For its second-quarter 2007, Veeco Instruments Inc of Woodbury, NY, USA has reported revenue of $98.8m (61% from process equipment; 39% from metrology). This is flat sequentially and down 12% on $111.6m a year ago (as well as being below the firm’s guidance of $100-105m).

Of the total revenue, by market sector 32% came from data storage, 11% semiconductors, 26% high-brightness LED/wireless (MOCVD and MBE epitaxial deposition equipment), and 31% scientific research (compared to 36%, 10%, 21% and 33%, respectively, for Q1/2007. Year-on-year, data storage revenue has fallen 41% while HB-LED wireless has risen 40%.

“Veeco’s revenue was below our guidance due primarily to the field acceptance delay of a new data storage PVD system and end-of-quarter data storage customer factory shut-downs,” says chairman Edward H. Braun (formerly CEO). “Weakness in semiconductor also impacted revenue and profitability,” he adds. Net loss was $2.6m, compared to net income of $3.0m a year ago.

Orders were $112.5m (down 21% on a year ago, but up 6% sequentially). This included $77.7m for process equipment (rising to 69% of total orders) and $34.8m for metrology (falling to 31%) . Orders by market sector show data storage rebounding by 41% compared to Q1. However, year-on-year, data storage is still down 42% and semiconductor is down 58%, while scientific research is up 16% and HB-LED/wireless is up 26%. At the end of June, order backlog was $161m (the highest in three years).

“Veeco is currently experiencing a challenging overall data storage market, primarily due to customer consolidation and a slower-than-expected recovery in capital spending, as well as a depressed semiconductor environment,” says John R. Peeler (who joined Veeco as CEO at the start of July). “While we have an exciting pipeline of new products across all of our markets, many of these are in the early stages of shipments and therefore carry risks associated with customer acceptance and revenue recognition. Therefore, we are forecasting weak third-quarter revenue and profitability with improvement in the fourth quarter,” he adds.

For Q3/2007, Veeco expects revenue to fall slightly to $92-97m, orders of $100-115m, and a decline in profitability due mainly to low metrology revenues as well as new data storage products selling at introductory pricing.

However, for second-half 2007, Veeco expects revenue of $200-220m (up from $197.9m in first-half 2007). This should bring full-year revenue to $400-420m (down 5-10% on 2006).

“While we are disappointed that 2007 will likely not be a growth year for Veeco, we are pleased that our strong pipeline of new products will set the stage for an improved 2008,” says Peeler. “During the coming months, I will be working with Veeco’s senior management team to develop new strategies for improving Veeco’s growth and profitability,” he adds.

See related items:

Veeco appoints John Peeler as CEO; receives Q1 orders of almost $11m for K-Series MOCVD systems

Veeco’s boom in MOCVD orders driven by LED market

Veeco’s HB-LED/wireless related revenues grew 42% in 2006

See company profile