News

8 November 2006

 

Kopin revenues fall during transition to higher-margin products

Kopin Corp of Taunton, MA, USA has reported preliminary third-quarter 2006 revenue of $15.6m (pending the completion of an independent review of past stock option grant practices). This is slightly higher than 5th October's
revised guidance of $14-15m, but still down on it previous guidance of $19-20.5m and down 17% from $18.9m in Q2/2006 and 39% from $25.4m a year ago.

This is due mainly to CyberDisplay revenue of just $5.6m, down from $6.8m in Q2 and $14.6m a year ago. The third quarter was impacted by the requirement for further testing of the display module [for the US Army's Thermal Weapon Sight II (TWS II) program] and slightly lower III-V revenues than we had anticipated," said president and CEO John C.C. Fan. III-V revenue of $10.0m is down from $10.8m a year ago and $12.1m in Q2, largely due to a customer's short-term inventory correction.

For the nine months to end-September, revenue was $53.3m (down 19% on a year previously): CyberDisplays $18.3m (down 49%); III-Vs $34.9m (up 20%). Cash
reserves are down from $119.8m at year-end 2005 to $108.7m.

"This year has marked a period of transition for Kopin as we introduce new, higher-margin products, expand our global manufacturing capacity and broaden the reach of our technology to new end markets," says Dr John C.C. Fan,
president and CEO. "Shorter product life cycles are fueling an ever-increasing level of design activity in both our III-V and CyberDisplay businesses. Our technology enhancements, product innovations and manufacturing capacity expansion are all steps designed to help Kopin
achieve long-term growth."

"Discussions with our customers indicate that 2007 will be an exceptionally strong year for the handset market, not just in terms of the number of units sold but also the content per phone," Fan says. "We also expect momentum in our HBT business to be driven by growth in WiFi and WiMAX networking equipment.

"Trends in the wireless sector continue to be favorable, and we have been working hard to increase capacity," Fan continues. "KTC, our OEM HBT manufacturing facility in Taiwan, is now qualified for production of certain products for our largest customer. The ramp of KTC and the addition of three new large HBT production machines at our wafer fabrication facility in Massachusetts will allow us to increase our III-V capacity by 50% in the next 12 months."

"Through a combination of technology improvements, new product introductions and capacity expansion, Kopin is positioning itself for growth in what we expect to be a strong year ahead," concludes Fan. "We continue to execute on various elements of our long-term strategy by transitioning into higher-margin and higher-growth applications - particularly in the military and mobile video markets."

For fourth-quarter 2006, Kopin expects revenue to recover to $17.5-19.0m.

* During Q3/2006, Kopin repurchased about 550,000 shares of its common stock, bringing its total repurchase to $13.7m of the $15m authorized at the inception of the stock buyback program. As a result of the stock option
review, Kopin¹s stock buyback program has been suspended until the company is current with all of its regulatory filings.

Visit: http://www.kopin.com