stocks industry
Between the end of April 2010 and the end of April 2011 the Dow Jones climbed by 16 percent, the value of FTSE increased by 12 percent and the Nikkei fell by 8 percent. The Japanese index was on track to make a small gain during that timeframe, but share prices plunged in the wake of the quake and tsunami.
Tech shares have followed the general market trend, with the NASDAQ has rising by 14 percent in the 12 months leading up to the end of April 2011. And III-V shares have fared slightly better on average. Of the 20 companies featuring on the Compound Semiconductor Share Price Leaderboard (see p44), 11 have outperformed the NASDAQ, with three increasing in value by more than 100 percent. In comparison, 9 have been below that benchmark, including Cree, which is now propping up the leaderboard following a dramatic change in fortunes – last year it was in fifth place.
Fibre-laser fortunes The canniest investment in a III-V company over the last year would have been the buying of a stash of shares in the vertically integrated, fibre-laser manufacturer IPG Photonics. During this time period, shares in the leading fibre-laser maker trebled in value, with most gain made in the last few months (see Figure 1).
On 25 February 2011, the day that IPG posted its financial results for fourth fiscal quarter 2010, share prices jumped by 40 percent. This was driven by a hike in revenue to $101 million, nearly double the figure for the equivalent fiscal quarter of 2009, and a leap in profit to $27.1 million. In the fourth quarter of 2009, profit was just $3.1 million.
Although IPG’s full-year figures do not show such impressive growth, it is abundantly clear that the company is heading in the right direction. Sales for fiscal 2010 were $299.3 million, up $113.4 million year-over-year, and profit was $54 million, ten times better than the previous year.
Commenting on these results, company CEO and founder Valentin Gapontsev claimed that the sales growth in fiscal 2010 stemmed from a growing industry acceptance of the firm’s fibre lasers, especially in materials processing applications such as cutting, welding, marking and engraving. Sales to this sector more than doubled in the fourth quarter of 2010, compared to the equivalent quarter of the previous fiscal year.
“Geographically, we achieved sales growth in every major region, with China and Europe reporting the largest year- over-year increases of 256 percent and 92 percent for the quarter, respectively,” explained Gapontsev.
Further success appears to be on the cards for IPG as the company continues to grow its revenues, invest in the development of products and manufacturing technology
and expand manufacturing capacity. As Compound Semiconductor went to press, IPG posted sales of $100 million in the first fiscal quarter of 2011, historically the firm’s weakest quarter of the year. Revenue guidance for the second quarter is $102-110 million.
Growing wafers, growing business Second on the share price leaderboard list is Cardiff- headquartered epiwafer supplier IQE. Shares in this firm have been steadily increasing in value since early 2009, hit £0.59 this February and have dropped back slightly since to around £0.45.
Commenting on the fiscal 2010 sales figures that were released on 29 March, 2011, CEO Drew Nelson said that the company is currently enjoying a great deal of financial success due to very strong growth in its core business, high-speed connectivity, which includes wireless-related products for all forms of mobile device communications. Sales of wireless products for the most recent fiscal year, which ended on 31 December, were up 32 percent year- over-year, and accounted for three-quarters of the firm’s £72.6 million sales.
Revenue for 2010, which exceeded that of 2009 by £20 million, was bolstered by the acquisition of the US firm Galaxy Semiconductors. That move means that IQE can now produce antimonide wafers, which are used in infrared applications, at two sites: Spokane, WA and Milton Keynes, England. To partly fund the buy-out and also repay borrowings and finance capital expenditure, in the Fall of last year IQE raised $20.8 million through the selling of 65 million new shares.
Long-term shareholders in IQE will be delighted to see profits of £6.3 million for fiscal 2010. The previous year’s profit was one-third of this, and prior to that the company
June 2011
www.compoundsemiconductor.net 43
Figure 1. IPG Photonics’ share price has shot up in the last 12 months on the back of rising sales in the fibre laser market
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