Rubicon Technology, Inc. (NASDAQ:RBCN), a leading provider of sapphire substrates and products to the LED, RFIC, semiconductor, and optical industries, reported financial results for its third quarter ended September 30, 2012.
The Company reported that third quarter revenue increased to $19.9 million from $17.0 million in the prior quarter driven by strong six-inch sapphire wafer sales. Revenue from six-inch wafer sales increased 62 percent sequentially as demand increased from both the Silicon-on-Sapphire and LED markets. Due to low industry pricing for two through four inch core products, the Company decided to sell a limited quantity of those products in the quarter. Raja Parvez, President and CEO of Rubicon Technology, commented, “We saw strong demand for our six-inch polished wafers in the quarter from both key markets, SoS and LED. While the recovery of the LED market is slower than expected, the strength of our technology has allowed us to outperform our peers by enabling us to take a leadership position in supporting emerging technologies like Silicon-on-Sapphire, large diameter LED substrates and large area optical windows.”
Gross margin in the third quarter increased to 12.3 percent, up from break-even in the prior quarter. The Company’s operating loss for the third quarter was reduced to $1.1 million from $3.1 million in the prior quarter, and earnings per share were $0.01 after recording a foreign currency gain and additional income tax credits.
Mr. Parvez continued, “While the LED market in general continues to remain fairly weak, we are seeing signs of improvement, and the SoS market remains strong. During the current LED industry cycle we continue to focus on enhancing our competitive position by developing new products, adding intellectual property and reducing our cost structure.”
Fourth Quarter 2012 Guidance
Commenting on the outlook for the fourth quarter of 2012, William Weissman, Rubicon’s Chief Financial Officer said, “For the fourth quarter we expect revenue to be similar to that of the third quarter with most of our revenue again coming from six-inch polished wafer sales. Pricing for two-through-four inch cores has not yet started to rebound, so we will likely sell limited volume of these products again in the fourth quarter. Gross margin will likely be in the high single digits as average pricing for six-inch wafers will be somewhat lower in the fourth quarter. The down cycle in the LED market has certainly delayed broader adoption of six inch substrates among LED chip manufacturers, and six-inch usage remains limited at this time. We are now beginning to see some chip manufactures re-engage their development work on six inch and expect strong growth in the six-inch market in the second half of next year. However, in the near term we expect to see some pricing pressure on six-inch given the limited demand and competitors trying to qualify for that business. Consequently, we expect a loss per share between $(0.02) and $(0.05) in the fourth quarter based on 22.5 million shares outstanding and a 50 percent tax benefit.”
