Rubicon Technology, Inc. (NASDAQ:RBCN), a leading provider of sapphire substrates and products to the LED, RFIC, semiconductor, and optical industries, today reported financial results for its fourth quarter ended December 31, 2011.
The Company reported fourth quarter revenue of $19.4 million, which was slightly below the range of management’s November guidance. Revenue decreased both year-over-year and sequentially, largely as a result of weak demand from the LED market due to excess inventory in the LED supply chain. Gross margin in the fourth quarter was 12.1 percent, which was impacted by reductions in pricing and by lower utilization of the Company’s fabrication and polishing operations. The Company recorded an operating loss of $0.7 million, offset by a reduction of the full year tax rate to 30.3 percent, resulting in fourth-quarter earnings of $0.04 per diluted share.
Raja Parvez, President and CEO of Rubicon Technologies, commented, “Market conditions were very challenging in the fourth quarter. Demand was limited, for both sapphire wafers and cores, because of excess inventory in the LED supply chain. We are now beginning to see some improvement, however, with orders for two through four inch cores increasing in the first quarter. We have continued to maintain high utilization of our crystal growth facilities throughout this slowdown because we are confident that demand will be strong in the second half of 2012. The LED industry’s largest potential market, general lighting, is in its infancy, and the more established markets for LEDs such as consumer electronics and the automotive industry have plenty of growth opportunities as well.”
The Company previously disclosed that it signed a new agreement with its key customer for six inch polished wafers which outlines a base level of shipments from June through December 2012. The Company’s previous agreement with this customer expired in December 2011. Due to the challenging market conditions, the Company gave certain concessions to this customer in the fourth quarter by reducing the volumes and pricing requirements under the previous contract. The Company also provided accommodations to certain other key customers of its two through four inch cores and consequently wrote off $1.7 million of accounts receivable in the fourth quarter.
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