News Article

Financial Results: Avanex And Kopin

Avanex sees sales to non-Alcatel customers rise strongly, but is hit by the extra cost of ensuring products comply with hazardous substances regulations; Kopin's HBT epiwafer revenue shoots up thanks to strong cell-phone handset sales.

Steady Avanex hit by compliance costs
Optoelectronic chip manufacturer Avanex saw sales rise 11% sequentially to $40.1 million in the quarter that ended on March 31.

Encouragingly for the Fremont, CA, company, revenue from customers other than its main client - Alcatel - were up 23% on the previous quarter. However, gross margins were impacted by a $1 million inventory charge relating to compliance with the directive on the restriction of use of hazardous substances (RoHS).

Halting the manufacturing effort at its New York facility cost Avanex an additional $1.3 million, although with the company now nearing the end of its restructuring effort, CEO Jo Major is hoping to see a substantial improvement in the coming quarters.

Another unused building at its chip fabrication center in Nozay, France, is about to be vacated, and with Major conservatively estimating annual growth in the wider market of around 15%, the company's low-cost manufacturing focus may begin to bear fruit.

Net loss in the recent quarter was $10.2 million, while Major predicted that revenue would grow to between $42 million and $45 million in the current quarter, with expected gross margin improvement.

Kopin confident in strong HBT market
Sales at Kopin's III-V epiwafer division grew 37% year-on-year to reach $12.8 million in the quarter that ended on April 1.

Although that represented a slight decline sequentially, company CEO John Fan is very confident about the current market activity and Kopin's prospects.

Claiming an 80% share of the merchant HBT epiwafer market, Kopin is set to benefit from rapidly-increasing demand for these transistors, which are finding increased use in advanced handsets.

As well as increasing MOCVD manufacturing capacity by 50% over the next two years to meet the anticipated ramp, Kopin is qualifying KTC, its licensed manufacturing partner in Taiwan.

Overall, the Taunton, MA, company broke even on $18.7 million revenue in the reported quarter.

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