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For first-quarter 2008, Veeco Instruments Inc has reported revenue of $102.3m (41% from LED & Solar Process Equipment, 35% from Metrology, and 24% from Data Storage Process Equipment). This is down from last quarter’s $106.8m but up on $99.2m a year ago.

For the LED & Solar Process Equipment business (MOCVD and MBE epitaxial deposition systems) revenue was up a huge 90% from $22.4m a year ago and up 25% on last quarter’s $33.7m, to $42.1m (41% of total revenue, and now Veeco’s largest segment). Earnings before interest, taxes and amortization excluding certain charges (EBITA) for the business have risen from $1.8m a year ago to $8.6m. Gross margin has risen from last quarter’s 39.8% to 41%.

Growth comes mainly from demand from high-brightness LED makers. All of Veeco’s newst-generation, high-throughput K-465 GaN MOCVD systems shipped to Asia-Pacific, Japan and Europe have now received field acceptance. The firm has received positive customer feedback on the high margin that the system delivers for HB-LED makers due to its automation, higher throughput and yield, says CEO John R. Peeler. “Our competitor’s tools are producing either 138 or 90 wafers per day, depending on the system, while the TurboDisc K-465 produces over 200 wafers per day,” he reckons.

During the quarter, Veeco also began shipping its first MBE thermal deposition sources for the copper indium gallium selenide (CIGS) solar cell market.

Data Storage Process Equipment revenue was weak (as expected), falling year-on-year from $35.7m to just $24.1m. The Metrology business showed a sequential recovery in profitability, despite revenue falling year-on-year from $41.1m to $36.1m.

Overall, gross margin has risen from last quarter’s 37.9% to a better-than-expected 41.7% (ahead of guidance of 39%), despite lower revenues. EBITA was $5.3m, up on last quarter’s $4.1m. Compared to net income of $0.3m a year ago, net loss was $1.6m, but that included a restructuring and asset impairment charge of $3.2m related mainly to the consolidation of Veeco’s headquarters from Woodbury into its ion-beam facility in Plainview, NY, USA (saving almost $2m annually).

Bookings have risen year-on-year from $105.9m to $109.3m (with LED & Solar Process Equipment up 6% on $36.4m a year ago to $38.7m, including “several multi-unit orders at some key strategic penetrations of tier-1 LED customers”, says Peeler). Backlog rose $5.8m during the quarter to $179.3m.

As well as MOCVD systems, bookings also included both MBE systems and CIGS sources, says Peeler. “The thin-film CIGS market offers a very promising growth opportunity for Veeco, given the potential for increased efficiency and lower-cost panels than silicon,” he adds.

For second-quarter 2008, Veeco forecasts revenues of $102-110m. Bookings should rise to $110-118m, driven by sequential increases in both the Metrology and the LED & Solar Process Equipment segments.

End markets in HB-LEDs remain strong, with customers continuing to invest in capacity, says Peeler. Also: “In solar, our E-475 MOCVD system, with 50% more throughput than the competitor system, is helping the manufacture of some of the world’s most efficient low-cost III-V solar cells,” he claims.

In second-half 2008, Veeco anticipates continued improvements in gross margin (independent of sales volume), driven by better pricing, global supply chain initiatives, and outsourcing. Also, a focus on cost containment should cut operating spending from 38% of sales in 2007 to 36-37% in 2008.

For the full-year 2008 (Veeco’s ‘recovery year’), the firm reaffirms its guidance of revenue growth of at least 10%, from 2007’s $402m to about $440m. This should include $140-145m for LED & Solar Process Equipment (up 20-25% on 2007’s $116m). Also, Veeco targets growth in gross margin from 40% to 42%.

See related item:

Veeco boosted by HB-LED and solar market

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