KOPN CC
Pr Stuff
Revenue increased 81 percent to $24.6 million compared with $13.6 million for the same period in 1999. -- Product revenue increased 84.6 percent to $24.0 million in the fourth quarter from $13.0 million for the same period a year ago.
Net income increased 343 percent to $3.4 million, or $0.05 per fully diluted share, from net income of $776,664, or $0.01 per fully diluted share, in the fourth quarter of 1999. Net income for the fourth quarter of 2000 excludes a charge of $7.4 million, or $0.11 per share, for write-off of in-process R&D and related acquisition costs of Super Epitaxial Products.
Revenue from III-V products increased 64 percent to $18.2 million from $11.1 million for the fourth quarter of 1999. (Note:Kopin will use the term "III-V" to incorporate the breadth of its semiconductor processes, including GaAs HBT and its newly introduced carbon-doped Indium Phosphide HBT).
CyberDisplay(TM)product revenue increased 190 percent to $5.8 million from $2.0 million for the fourth quarter of 1999.
Commenting on the outlook for Kopin's business, Dr. Fan said, "Our CyberDisplay business should produce another solid year in 2001. With the advent of miniature DVD and video game technology, we expect to continue our penetration into the consumer electronics market both in the U.S. and abroad, and should begin to see demonstration units of 3G technology by the end of the second quarter. However, for the first quarter of 2001, we expect CyberDisplay revenue to decline sequentially because of softer-than-expected consumer electronics sales and an unsettled supply agreement with one customer.
"In our III-V business, general economic conditions and much weaker-than-anticipated handset sales have made our short-term outlook cautious," Fan continued. "In particular, forecast revisions by a number of handset OEMs, coupled with excess inventories industry-wide, will adversely affect our revenue in the first half of 2001. Consequently, we expect first-quarter revenue in the range of $12 million to $14 million, and a net loss in the range of $0.09 per share to $0.12 per share.
However, we expect that growth rates for the second half of 2001 should be in line with the first half of 2000. Our new III-V products should enable Kopin to capitalize on emerging trends in the fiber-optic industry and strategically position the company for the eventual rebound in wireless handset manufacturing."
CC Notes
Dr. Fan
- very challenging economic environment
- 24.6M in rev, up 81% y2y
- 18.2m for III-V products
- 5.8M in Cyberdisplay rev
- 3.3M in net income or 0.05 EPS
- Highlights: Optical communication product group created
- CXNT and NT relationship continue
- Matshushita, Samsung are customers.
- Shipped 1 millionth cyberdisplay in August
- III-V – completed Super Epi acquisition
- newly introduced carbon-doped Indium Phosphide HBT (or called GAIN) for OC-768 use and 3G wireless phones.
- KOPN and Rockwell introduced first commercial HbT product in the world.
- Cyberdisplay going to PDAs, been sampling to customers and feedback is positive.
- Resolved Cyberdisplay supply issue
- Financial overview
- 24.6M in revs and up 4% q2q
- 22.0M in product rev, 3% q2q
- III-V was 18.2M flat q2q
- Cyberdisplay 5.9M up 92% q2q
- Netincome was 3.3M,
- EPS was 0.05 vs. 0.06 last q.
- 73.8% cost of goods sold
- R&D was 5.6%
- SG&A 13.5% of rev, increased to amorization of Super Epitaxial acquisition
- Oper Income was 1.9M vs. 2.9M last q
- Super Epitaxial will be 5 cent dilutive to earnings for 2001
- 73.2M in cash, equities
- Debt 1.2M
- 15.3M in acct rec,
- 69 DSO
- 46% CXNT, 16% Mitshubishi
- Handset affecting HbT sales
- Fiber optics remain on track
- Cyberdisplay will be down due to one customer slowdown
- 0.09-12 loss EPS for next quarter
- Anticipate rebound second half in wireless handsets
- Dr. Fan objectives
- We are market and technology leader in our product and will invest to keep our technological edge
- Wireless, Fiber optics and minuature displays are focus area
- Economic pressure created significant declines in last several weeks.
- Q&A
- CSFB – congrats – Super Epi acquisition and GAIN?
- A: Super EPI has helped us in it, Looks at new products better.
- Reduce voltage with N2 addition?
- A: yes, we decreased about 150-170 mV, question with how much it can go in a PA. If we have a two stage amplieflier, we use a 3 volt battery. We are going activity to persue 2.7V phone which is in demand.
- Why no weakness in OC-192?
- A: We don’t think be a decrease but not much inventory to NT.
- Monet – Outlook for q1?
- A: We saw dropoff in the last 2-3 weeks. One customer substantially reduces and also another too.
- CNXT buying less?
- Expect for fiber optic, demand is slowing across the board. Some believe a rebound in q3.
- Lost clients?
- More a volume issue. There volume growth has change
- Sandy Harrison – 10% customer for q
- CXNT 38%, Mitsubishi 12%. Some others were getting close to 10%.
- Not seen weakness from NT?
- Fiber optics see no weakness so far.
- Optical %?
- 16% of revs
- Availability of substrates?
- We see always a challenge, but market is softening. Our supplier considering it a strong business.
- InPh?
- A: Coming on much faster than anyone thinking of it. Going to be important for OC-768 technology. InPh uses 1.5V vs. 3V. The questions is the cost. Will go in production late this year. Availabiliy of substrate depends on substrate manufacturer to ramp it up in 6 months. Manufacturing of InpH can be changed from current 4 inch GaAs fabs. We can grow InPh in our current system. Botleneck will be substrate mfrs.
- When Clear up Cyberdisplay supply issue?
- Did it all quarter, finished at the enfd of q
- Capacity?
- New facilty about ready to be moved into. Shifting to fiber optic items and hope to introduce these products the second half. Moving scientists and engineer into new product developments. Not going to ramp up HbT capacity.
- Nonrecurring items?
- 500K will be superEpi acquisition will be reoccuring, 500K in InPh patents, more marketing in 3G phones for 3G phones in Japan
- Pricing for HbT wafers?
- In line with projections. ASP %625, Will decline 10-15% in 2001 as standard in the semi sector. Customers want pricing releif of 10-15% more.
- Cyberdisplay breakeven?
- Good question, discussing price vs. quanity with vendors. Trying to expand into camcorders, but customers want pricing relief. Debating if we want to go that way. Most want B&W cyberdisplays.
- Losses in cyberdisplay?
- 30% in operating Margin, lost 2M overall.
- 3G design wins?
- Focusing on 3G phones in Japan since first to come out with it with NTT Docomo. No announcements since sensitive now. Color video phone is the future demand. Our display good for this. The margin is very good.
- Carl Mooney – cyberdisplay can it go away if KOPN no reduce price.
- Two customers satisfied, third wants ramp up with comensurate decrease in price. We are focusing on phone. Cautiously optimistic that we will get their business. Will finalized in next few week whether we go with third customer’s demands.
- III-V?
- Rev growth for first q will be 50%, Second quarter will be flat, see growth in second half.
- CIBC – InGap?
- Ingap (optical ) has partially increased. Customer want low cost for their customer.
- 6 inch production?
- Qualifying two more 6 inch machines and should produce rev in second quarter. Should be nmaterial rev.
- GAIN vs. competition?
- Shipping production for GAIN is not clear due to visibilty. People are sampling product. InPH will come out this year. GAIN will come out late this year or next year.
- Supply dispute on cyberdisplay?
- Not a dispute, negotiaton on volume vs. price. We priced cyberdisplay to gain share in camcorders. Target is the phone not camcorders.
- Cashflow?
- 2.5M in depreaiton and amorization. We generated 2M in cashflow for the quarter and negative for next two quarters. Cashflow positive second half.
- III-V and Cyberdisplay GM?
- Cyberdisplay GM target is 35%, III-V is 40-45% GM longterm
- Rev guidance?
- Rev for HbT will be down 50% q1 and sequentially flat in q2. Rebound second half.
See prev post for last q CC notes
CNXT is the albatross on KOPN’s neck.
Jack
