13 July 2016

SemiLEDs' revenue falls 18% quarter-on-quarter, down 47% year-on-year

For fiscal third-quarter 2016 (to end-May), LED chip and component maker SemiLEDs Corp of Hsinchu, Taiwan has reported revenue of $2.38m (slightly below the expected $2.4-3m), down 18% on $2.92m last quarter and down 47% on $3.5m a year ago.

Gross margin was negative 61%, worsening from negative 27% last quarter (and negative 24% a year ago) and back to the negative 61% of two years ago.

Operating expenses have been cut from $1.98m last quarter to $1.69m, due mainly to R&D expenses falling from $0.62m to $0.39m and employee termination benefits falling from $0.15m to $0.06m. Operating margin has worsened further, from negative 88% a year ago and negative 95% last quarter to negative 132%.

On a non-GAAP basis, net loss has risen from $2.2m ($0.77 per diluted share) last quarter to $3.1m ($1.06 per diluted share), back above $2.8m ($0.10 per diluted share) a year ago.

Capital expenditure has risen slightly, $0.14m last quarter to $0.18m (although still less than $0.28m a year ago). Also, net cash used in operating activities has risen from $1m last quarter to $1.3m (compared with cash inflow from operating activities of +$0.1m a year ago). Total free cash outflow has hence risen from $0.17m a year ago and $1.15m last quarter to $1.5m. During the quarter, cash and cash equivalents fell from $5.3m to $3.5m.

"The transition toward the fabless business model has taken longer than we anticipated," notes chairman, president & CEO Trung Doan. "However, we still believe it is the right model," he adds. "This should help us to lower our cash needs while evaluating other potential business opportunities."

On 6 July, SemiLEDs entered into an agreement for Dr Peter Chiou to purchase 577,000 newly issued shares (about 19.6% of its outstanding common stock) at $5 per share. Chiou has also agreed to purchase a $1,615,000 0%-interest convertible note with a maturity date of 29 September 2017. Subject to approval at the next shareholders meeting, the note will be convertible into a number of shares equal to $1,615,000 divided by the conversion price ($3.40, or the 5-trading-day volume-weighted average price on the NASDAQ Stock Market ending on the maturity date, whichever is less).

These investments are expected to be made in three instalments, as follows:

• $1,000,000 (already received);
• $1,885,000 (to be wired to the firm on or before 15 August) - upon completion of the share purchase, Chiou will be appointed a member of SemiLEDs' board of directors (Chiou has agreed to waive any compensation for his services on the board); and
• $1,615,000 (to be wired to the firm on or before 29 September).

SemiLEDs cautions that there is no assurance that it can successfully close the financing or if Dr Chiou is able to meet the remaining funding requirements of the purchase agreement.

For fiscal fourth-quarter (ending 31 August), SemiLEDs expects revenue of $2-2.5m.

See related items:

SemiLEDs sells stake in firm to Dr Peter Chiou

SemiLEDs announces reverse stock split to maintain NASDAQ listing

SemiLEDs improves quarterly margins and cash reserves

SemiLEDs' quarterly revenue falls a further 5%

SemiLEDs' operating efficiency improvements yield positive quarterly cash flow

Tags: SemiLEDs

Visit: www.semileds.com