Gallium sales help AXT to cut its loss in half
Substrate supplier AXT says that customers are starting to order its 4-inch GaAs substrates now that it has managed to iron out problems with material quality.
The Fremont-based company made the announcement as it attempted to draw a line under what has been a tumultuous fiscal 2004 in its full-year financial results.
After a year in which it faced a shareholder lawsuit, took a sales hit due to non-compliance with product testing procedures that led to a boardroom reshuffle, paid a $1.4 million charge following litigation by rival substrate supplier Sumitomo Electric Industries, and laid off 50 employees, AXT reported a net loss of $13.6 million.
That bottom-line figure contrasts with a net loss of $26.7 million in the previous year. At $35.5 million, overall revenue came in just slightly up on 2003 sales.
"We made significant quality improvements in our 4- and 6-inch GaAs substrates," said interim CEO Don Tatzin. "Samples of 4-inch diameter substrates sent to several customers that were processed using our new cleaning equipment appear to be largely haze-free, similar to our 2- and 3-inch substrates."
Tatzin added that the company had recently won several orders for 4-inch products from customers who had steered clear of AXT for several months: "We believe this indicates a turnaround is at hand, if we can maintain high quality."
In its most recent quarter, however, sales to LED manufacturing customers declined in what AXT called seasonal fluctuation, although the decline was partially offset by increased sales of gallium.
AXT made a net loss of $2.3 million on revenue of $7.6 million in the three months up until 31 December 2004.
Despite the improving picture regarding substrate orders, the company forecast revenue in the current quarter to be flat, resulting in a net loss of around $3.2 million.
AXT plans to expand its joint-venture activity in China in a bid to return to profitability in 2005.
