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Rubicon Makes $94m Nasdaq Debut

The sapphire substrate maker floats on the stock market at $14 per share, claiming that the LED industry is moving towards its bigger wafers.

Rubicon Technology s initial public offering should raise at least $93.8 million after hitting the market at $14 per share on November 16.

This figure is based on the sale of the company's first 6.7 million shares, which may be followed by a further million “over-allotment" shares, if needed.

In Rubicon s first trading day on the Nasdaq exchange its shares initially shot up to over $19, before closing at $17.50.

The flotation appears to have come at exactly the right time, as the company has just hit 100 percent utilization at its Illinois manufacturing facilities and needs funds to continue its expansion.

CFO William Weissman pointed out in Rubicon s online investor presentation that the company's revenues in 2007 so far are up by 60 percent over the same time in 2006. He expects a further 40 percent hike in 2008 and says the company already has $40 million in orders to support that prediction.

According to Weissman, Rubicon became profitable in the first three months of this year, and has further improved since then.

Rubicon s profitability appears to have been partly driven by the company's large wafers, with which it can achieve higher operating margins. The company claims to be the only manufacturer of 6-inch sapphire wafers, which are used in silicon-on sapphire RF applications, and is now working on upgrading its processes to 8-inch wafers.

The company s investor information highlights that the growth potential of the LED market, where sapphire is used as an economical substrate for GaN-based devices, is vital for its success. Although most LEDs are still made on 2-inch wafers, Rubicon's CEO Raja Parvez asserted that “the market is moving towards us" on substrate diameters.

$14 is the high end of the range that the company had set for its IPO. Together with the opening-day bounce, this suggests that Parvez and Weissman s have at least succeeded in grabbing investors attention.

Parvez in particular went to great lengths during his investor presentation to tie Rubicon s fortunes to the rising star of the LED industry.

“Sapphire is to the LED as silicon is to the microprocessor," he said repeatedly.

The optimistic outlook Rubicon painted for sapphire is backed up by a recent iSuppli report, which predicts that the value of the GaN LED market will more than double from its 2007 level by 2010.

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