For its fiscal second-quarter 2012(to end-March),Emcore Corp of Albuquerque,NM,USA,which makes components,subsystems and systems for the fiber-optic and solar power markets,has reported revenue of$37.8m.This is down 20%on$47.2m a year ago and below guidance of$38-40m,but up 1%on last quarter due mainly to higher Fiber Optics revenue,offset partially by a reduction in Photovoltaics business.
Fiscal Q2/2011 Q3/2011 Q4/2011 Q1/2012 Q2/2012 Revenue$47.2m$49.5m$52.1m$37.5m$37.8m
After falling from 59%of total revenue in the September quarter to just 49%in the December quarter,the Fiber Optics segment rebounded to 58%.Fiber Optics revenue was$21.9m,down 27%on$30m a year ago but up 20%on$18.3m last quarter.This was due mainly to initial recovery efforts after last October's flooding in Thailand that suspended operations at primary contract manufacturer Fabrinet Co Ltd(which normally accounts for half of Emcore's Fiber Optics revenue),submerging most of Emcore's process and test equipment as well as its inventory materials,and significantly impacting its ability to meet demand for fiber-optics products."We are currently on schedule and focused on rebuilding the manufacturing infrastructure for our impacted product lines,"says Emcore.
Although unaffected by the Thailand floods,the Photovoltaics segment fell from 51%of total revenue last quarter to 41%(reverting to the level of the September quarter).Photovoltaics revenue was$15.8m,down 8%on$17.2m a year ago and 17%on$19.1m last quarter due to a postponement(to the latter part of 2012)in shipping a large satellite solar cell order worth more than$4m to an international customer.However,Photovoltaics revenue has historically fluctuated significantly due to the timing of program completions and product shipments of major orders,notes the firm.
Although down from 22.4%a year ago,gross margin has risen from just 9.3%last quarter to 14.2%,due mainly to improved operational efficiency and the Fiber Optics segment's recovery.Fiber Optics gross margin was 9.4%,down from 18%a year ago but recovering from the flood-hit-4.8%last quarter.Photovoltaics gross margin has fallen further,from 30.2%a year ago and 22.7%last quarter to 20.9%due to the lower revenue base.
Lower fiber-optics-related revenue due to the flood resulted in higher manufacturing overhead as a percentage of revenue.Manufacturing of certain fiber-optics-related components was moved to Emcore-owned facilities in the USA,involving higher labor and other related costs.Instead of completely rebuilding all flood-damaged manufacturing lines,it was decided to realign the fiber-optics product portfolio and focus on business areas with strong technology differentiation and growth opportunities.During the March quarter,the firm identified$0.4m of inventory on order related to manufacturing product lines for legacy products that were destroyed by the flood and will not be replaced.
Although up from$4.7m on a year ago,operating loss has been cut from$2.8m last quarter to$8.9m,due mainly to the improved gross margin as well as a decrease in flood-related losses from$5.7m last quarter to just$0.1m.Also,there has been a reduction from about$1m last quarter to$0.2m in operating losses related to the Suncore concentrated photovoltaic(CPV)component-and system-making joint venture with San'an Optoelectronics Co Ltd in Xiamen,China.
Although up from$4.1m on a year ago,net loss has been reduced from$14.2m last quarter to$9.3m.As of end-March,cash,cash equivalents and restricted cash totaled$25.4m,and working capital totaled$13.5m.Net cash fell significantly from last quarter,due mainly to increased inventory levels(to meet the ramp up in production),equipment purchases associated with the Fiber Optics production line rebuild,and operating losses.
As of end-March,order backlog for Photovoltaics totaled$55.7m,up 8%on$51.7m last quarter,driven partly by an increase in orders for satellite solar cells.The backlog includes$10.1m of terrestrial solar cell orders from Suncore.However,in the Fiber Optics segment,revenue is still constrained by the rebuilding of production capacity.Since order backlog exceeds what it can fulfill,Emcore says it is hence not using backlog as a measure of Fiber Optics business at this time.
Regarding October's flood,Emcore is rebuilding the impacted production lines at another Fabrinet site in Thailand(Pinehurst,instead of the nearby Chokchai facility)as well as at its own manufacturing facility in China.The new CATV production line in China is online and manufacturing products to meet customers demand.The new production line at Fabrinet for narrow-linewidth lasers for coherent 40 and 100Gb/s transmission applications has been up and running since early March(ahead of the original schedule);products have passed Telcordia qualification requirements,and customers are completing their qualification and starting to take shipments,says the firm.
Near the end of the quarter,on 27 March,Emcore agreed to sell certain assets and to transfer certain obligations associated with its Fiber Optics segment's vertical-cavity surface-emitting laser(VCSEL)-based product lines to optical and wireless communications product maker Sumitomo Electric Device Innovations USA Inc of San Jose,CA(SEDU,a subsidiary of Japan's Sumitomo Electric Inc)in exchange for$17m in cash.The assets include inventory,fixed assets and intellectual property(optical transceivers and active cables,as well as the VCSEL fab in Albuquerque),which yielded$4.3m of revenue in the March quarter.
For its fiscal third-quarter 2012(to end-June),Emcore expects revenue of$38-41m,due to a further 10-20%recovery in Fiber Optics production capacity and higher shipment from the Photovoltaic business.Including the contribution of VCSEL-based products(being sold to Sumitomo)for the entire quarter would raise revenue to$42-45m,up 15%on the March quarter's$37.8m.
