Pricing pressure takes its toll on Veeco's financials
With few MOCVD deals available, Veeco continues to experience significant competitive pricing pressure which is having an adverse impact on the company’s margins and breakeven level
Veeco Instruments is providing select financial metrics and business highlights for the quarter ended June 30th, 2013.
Due to the accounting review announced on November 15th, 2012, the company is unable to report revenue and earnings information.
Second quarter 2013 bookings were $85 million, up 21% sequentially, including: LED & Solar $58 million (MOCVD $52 million and MBE $6 million), and Data Storage $27 million.
The company’s unaudited cash balance at June 30th, 2013 was $585 million, down slightly from the $588 million reported at the end of the March quarter.
Second quarter shipments were up sequentially in MOCVD and were flat in MBE and Data Storage.
John R. Peeler, Veeco’s Chairman and Chief Executive Officer, commented, “MOCVD orders improved about 42 percent sequentially to $52 million as we won some important deals with top customers in Korea, Taiwan and China. Data Storage and MBE business conditions remain muted as customers continue to tightly manage their capital expenditures, so second quarter orders were flat on a sequential basis.”
“Market signals in MOCVD remain mixed. On the positive side, utilisation rates in Asia are high and stable, and customers express optimism for their LED business profitability and growth. Customers report strong demand for mid-power LEDs for indoor replacement bulbs and high-power LEDs for outdoor lighting."
Yet, they remain extremely cautious about capacity expansion. As a result, while quoting activity has increased from earlier in the year, the conversion process from quotation to purchase order is slow. We expect MOCVD order patterns to remain choppy as the timing of large multi-unit deals can have a significant impact on our quarterly bookings levels.”
“While our Data Storage customers remain cautious on capacity additions, the decline in areal density growth and resulting increase in drive component count (i.e. heads and media per drive) could pressure manufacturing capacity later in the year. In the meantime, we remain focused on collaborating with our customers on development of next-generation solutions that are aligned with their roadmaps.”
Peeler concluded, “We are pleased that Veeco continues to weather this business downturn with a strong cash position. We are making significant progress on our accounting review and have achieved several key milestones. It is a top priority for Veeco to conclude this review as soon as possible, be able to report complete financial results, and get up-to-date on our delayed filings.”
Veeco hosted a conference call reviewing the firm's business highlights and current market conditions. A replay of the call will be available until 8:00pm ET on August 12th, 2013 at 888-203-1112 or 719-457-0820, using passcode 9925317, or on the Veeco website.