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Editorial: CS & SSL Stock Portfolio Up with Spire, Cree and Emcore as Best Performers
... Jo Ann McDonald's "Lucky 13" Nasdaq exchange (USA) compound semi (CS) and solid state lighting (SSL) industry stock picks are doing well, overall, gradually climbing back up out of the downturn hole. Cree Inc. (trading symbol: CREE) and Spire Corp. (trading symbol: SPIR) are doing especially well, 11 moved...
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Hittite IPO Could Bode Well for Telecom Pickup
CompoundSemi News StaffAugust 4, 2005...With the company’s chips manufactured at a number of foundries, Hittite
Microwave’s strong IPO showing may boost the profits of the supply chain
member companies under it. Hittite Microwave Corp. priced its IPO at $17 per
share on July 22, 2005. Hittite offered 2,700,000 shares of common stock, and
the remaining 1,800,000 was offered by stockholders. On the first day of trading,
the company’s shares rose to $19.46. At that price the company will gain
$52.8 million in revenue from the company-owned 2.7 million shares. The managing
underwriters of the offering are Lehman Brothers Inc., acting as the sole book-running
manager, Needham & Company, LLC, Piper Jaffray & Co. and Thomas Weisel
Partners LLC. The trading on August 3rd ended with the stock at $19.59 per share.
Hittite Microwave Corporation designs and develops integrated circuits, modules,
and subsystems for RF, microwave and millimeterwave applications covering the
frequency range of DC to 110 GHz. The US companies who manufacture the chips
supplied to Hittite, Global Communications Semiconductors, TriQuint Semiconductor,
M/A-COM, and United Monolithic Semiconductors may benefit from Hittite’s
strong showing.
According to Hittite’s prospectus, company revenue has increased sequentially
over the past 13 years, and has remained consistently profitable.In the recent
fiscal year, Hittite posted revenues of $61.7 million, and a net profit of $11.9
million. The company said, “We will continue to focus on investing
in our core design and engineering competencies, while outsourcing the capital-intensive
requirements of semiconductor fabrication.” The company is listed
under the symbol “HITT” on the Nasdaq exchange. Company
News Release August 4, 2005...Vishay Intertechnology of Melvern, Pennsylvania USA, one of the worlds largest semiconductor makers with 25,000 employees worldwide, has signed a letter of intent to purchase CyOptics Israel Ltd., the Isreali subsidiary of Cyoptics. CyOptics Israel Ltd. employs a team of engineers who design optical components in the field of infrared technology. It has a wafer fab in Yokneam, Israel, for the production of gallium arsenide (GaAs) and indium phosphide(InP) chips for optoelectronics. Vishay plans to employ these engineers to develop new products at this facility.
Dr. Zandman, Vishay president and CEO commented, "The CyOptics Israel design team with its state-of- the-art wafer fab will provide the technological strength to place our existing optoelectronics division in the forefront of the gallium arsenide and indium phosphide technologies. The fab has been used for both R&D and production and can be adapted rapidly to the needs of Vishay. This acquisition is part of the ongoing effort to advance Vishay for future markets."
CyOptics, Inc., the parent corporation of CyOptics Israel Ltd., recently acquired the optical business of TriQuint Semiconductor and is consolidating its production of Indium Phosphide lasers and detectors for broadband communication systems in its wafer fab located in Breinigsville, Pennsylvania USA. Ed Coringrato, president and CEO of CyOptics, Inc., commented, “We built a world-class fab in Yokneam, Israel. We are delighted that the fab will remain a strong asset for the Israeli economy."
Bookham Posts Loss But Increases Revenue for Fiscal Year
CompoundSemi News StaffAugust 4, 2005...Bookham ended fiscal 2005 with a net loss of $18 million despite a revenue increase of 22% over fiscal 2004. Revenue increased from $50 million in fiscal 2004 to $61 million for fiscal 2005. In addition to the net loss, the company paid $21 million for a combination of severance payments and acquisition costs of New Focus.
The company did manage to cut costs by moving much of its test and assembly operation from Paignton in the UK to Shenzhen, China. The Shenzhen facility made up 11% of total revenue for the fiscal year. Bookham also cut research and development costs for the quarter by 32% over the same period of fiscal 2004 to $9.8 million in the latest quarter. The company boasted a reduction in overhead costs by 13% over the previous fiscal year.
CFO Steve Abely said in a conference call that the company still needs to raise more money. Bookham is selling assets for this purpose. The company hopes to raise $25 million in asset sales. According to the company, part of this will come from land and building sell-offs over the next fiscal quarter. Bookham projects between $62 million and $65 million in revenue for the next fiscal year.
Next Generation Lighting Initiative Started With Passage of Energy Bill
LIGHTimes StaffAugust 3, 2005...Both the US Senate and the House have approved the Energy Policy Act of 2005.
Among a multitude of programs the legislation creates, the act allocates up
to $50 million annually for the Next Generation Lighting Initiative (NGLI),
a public-private partnership to develop both organic and inorganic solid state
lighting that will replace traditional florescent and incandescent sources.
President Bush will sign the Energy Policy Act of 2005 on Monday, August 8. Content continues for LIGHTimes SecondPage members... Intematix Licenses Phosphors to Taiwan CompanyAugust 3, 2005...Intematix of Fremont, California USA, the phosphor solution provider, has reached
an agreement with Unity Opto Technology Co., Ltd. of Taipei County, Taiwan to
use its phosphor technology in its core and emerging designs. After considerable
deliberation and several months of discussions and collaborative pre-design
activities, the two companies concluded a multi-faceted license-based agreement
based on Intematix’ White Lightning Y460 and Y450 patent-backed phosphor
solutions. Content continues for LIGHTimes SecondPage members... Alfalight Awarded $1.4 Million for Phase II of SHEDS ProgramAugust 2, 2005...Alfalight of Madison, Wisconsin USA has received $1.4 million in funding for
Phase II of the Defense Advanced Research Projects Agency (DARPA) Super
High Efficiency Diode Sources (SHEDS)
program. According to DARPA, the goal of the SHEDS program is achieve 80% electrical-to-optical
efficiency in the generation of light from stacks of diode laser bars. The spectral
range of interest for the program is 880nm to 980nm. This is the range for pumping
directly into the upper laser level of neodymium-doped yttrium aluminum garnet(Nd:YAG)
and ytterbium-doped yttrium aluminum garnet (Yb:YAG) lasers.
Alfalight proved itself by using its Aluminum-Free Active-region (ALFA) technology
to reach 71% wall-plug efficiency in November of 2004. (Ref: article).
This accomplishment was above and beyond the Phase I goal for the SHEDS program
of achieving 65% efficiency. In addition, it was ahead of the scheduled end
of Phase I which was March 2005. Alfalight was certified by the National Institute
of Science and Technology (NIST) in March of this year to have met the Phase
I program objectives. Phase II of the program has a target of 80% power conversion
efficiency (PCE) in a 480W stacked array at 50ºC. Alfalight has taken part
of in the SHEDS program since its DARPA contract award in September of 2003.
“With DARPA’s support, Alfalight has made an extraordinary
leap in diode laser efficiency and capability,” said Manoj Kanskar,
vice president of Research & Development at Alfalight. “The Phase
II SHEDS award is a vote of confidence in our ability to deliver innovation
on demand. We are excited about the challenges this phase presents and about
the prospect for even further improvements in diode laser performance.”
According to Alfalight, their engineers for the project hope to further reduce
the optical and electrical loss mechanisms of current designs to achieve greater
overall efficiency. In addition, the engineers will attempt to create fundamentally
more efficient diode laser structures using quantum dots and unique epitaxial
growth methods. While the company obviously could not comment on the defense
applications of the findings, they hope the findings would be applied to commercial
applications for high-power fiber lasers including industrial materials processing
such as cutting and welding and printing/marking applications. The SHEDS program
will be highlighted at DARPATech 2005 in Anaheim, CA, August 9-11. Alfalight’s
latest results will be presented at the International Congress on Applications
of Lasers & Electro-Optics (ICALEO) in Miami, FL, November 1, 2005 by Dr.
Kanskar. Company
News Release. Epicom Introduces PA's for WiFi ApplicationsJuly 29, 2005...Epic Communications Inc.(Epicom), headquartered in Hsinchu, Taiwan has released
three linearized power amplifiers (PA’s) for low current handheld and high
power accesspoint WiFi applications. The PA’s, specifically designed for
the WiFi 802.11b/g and a/b/g specifications come with low current (PA2418), high
power (PA2420), and dual-band (PA7706) options to address current IT-based applications.
The devices can be used in WLAN as well as emerging embedded wireless applications
in handheld devices such as WiFi-enabled VoIP phones. According to the company,
the linearized PAs are designed with a novel linearizing technique (patent-pending)
that provides improved power efficiency and greater range for WiFi products while
maintaining data accuracy. Company
News Release Matheson Tri-Gas Starts Using the Supply Rewards ProgramJuly 28, 2005...Matheson Tri-Gas of Parsippany, New Jersey USA, a source provider of industrial
and specialty gases and gas handling equipment, is beginning to use a unique
program in hopes of improving customer loyalty. The program called Supply Rewards
offers labs reward points every time they purchase qualifying products from
a sponsoring manufacturer. The points can be redeemed for other products. Laboratories
can earn the points when they purchase products that they need. Then the buyers
can logon to the Supply Rewards Website. Purchasers can then type in the Supply
Rewards code from the label affixed to the product to have the points from their
purchase credited to their accounts. Company
News Release Veeco Announces Plans for Bangalore, India Nano Research Facility and Wins an Award
Scott McMahanJuly 27, 2005...While Veeco Instruments of Woodbury, New York is noted in the compound semi industry for their MOCVD and MBE equipment offerings, the company continues to make strides in the field of nanotechnology. Veeco most recently announced their plan to establish a nanotechnology
center in Bangalore, India. According to Veeco, Bangalore, India was chosen as
a location because of the nanotechnology research taking place and the chance
to work directly with the university called, Jawaharlal Nehru Center for Advanced
Scientific Research (JNCASR). According to the company, the facility will be staffed
with local scientists and engineers. The staff will have access to Veeco’s
Atomic Force Microscope (AFM), Scanning Tunneling Microscope (STM) products, and
other advanced nanotechnology application modules. The facility to be called the
‘Veeco-India Nanotechnology Laboratory’ will be jointly operated with
the JNCASR. The JNC promotes scientific research in interdisciplinary areas of
science and engineering.
John Bulman, Veeco's executive vice president of worldwide sales and foreign
operations, commented, "Now researchers and scientists in India will
have access to state-of-the-art Veeco products. We continue to see nanotechnology
as a strong growth opportunity for Veeco, given the continued government spending
around the globe."
Professor C.N.R. Rao, Honorary President of the JNCASR, explained the importance
of nanotechnology research in India. "Nanotechnology and nanoscience
are important opportunities for India. The Indian government has made major
allocations for nanotechnology between 2002 and 2007. A nanoscience initiative
of the Department of Science and Technology (Government of India) that began
in 2003 has identified and is working with more than 30 R&D institutions
to identify prospective nanotechnology products that can be commercialized.
Having access to the appropriate state-of-the-art instruments is critical to
future nanotechnology developments in India." Michael Weiss, Veeco's Vice President and General Manager for Asia, and professor
Rao will oversee the Veeco-India Nanotechnology Laboratory. Mr. C. Venkatram
Dattu has been appointed as the local Veeco manager responsible for day-to-day
activities of the lab. Professor G.U. Kulkarni of JNCASR will function as an
advisor.
In other Veeco news, the company was again won the R&D 100 award from Research
And Development Magazine for being among the top 100 commercial products exhibiting
technical excellence to be introduced in the past year. The award was given
for new technique enabling high-resolution, interferometer measurement through
glass and other transparent media. The technique allows optical profiling, a
non-contact 3D measurement of surface topography through a clear material. According
to Veeco, the technique can characterize samples through protective packaging,
environmental chamber windows, fluid cells or other transparent media, which
until now was not possible.
Strategy Analytics Predicts Growth in GaAs Market
CompoundSemi News StaffJuly 27, 2005...Strategy Analytics predicts that the GaAs market will grow 43% over the next five
years from the level it is now. Their report sites continued growth in handset
sales, coupled with increasing GaAs IC content in handsets as the primary driver
of the increased demand. They point to increased demand for GaAs ICs for the power
amplifier and RF switch functions in handsets in companies such as Skyworks and
RF Microdevices.
Asif Anwar, Director, Strategy Analytics GaAs and Compound Semiconductor Technologies
service, noted, "There are many dynamics operating in the GaAs Wafer
supply industry. Certainly, overall wafer demand due to the cellular industry
is increasing, but changing customer purchasing patterns means that it is easy
to miss the big picture of future wafer diameter and technology trends."
The Strategy Analytics report highlights the point that while demand is increasing
for GaAs IC’s, customers’ purchasing patterns are also changing.
So some companies have to expand while others have closed. The report also includes
analysis of regional demand trends, vendor market shares, wafer growth techniques,
pricing and forecasts by wafer diameter until 2009. Company News Release
Our news features are reported
by the CompoundSemi News staff writers.
For submissions or content suggestions, you can contact us using
editor -at - compoundsemi.com
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The
McDonald Report
Commentary & Perspective...
CS & SSL Stock Portfolio Up with Spire, Cree and Emcore as Best PerformersAugust 3, 2005...Jo Ann McDonald's "Lucky 13" Nasdaq exchange (USA) compound semi
(CS) and solid state lighting (SSL) industry stock picks are doing well, overall,
gradually climbing back up out of the downturn hole. Cree Inc. (trading symbol:
CREE) and Spire Corp. (trading symbol: SPIR) are doing especially well, 11 moved
into the next highest single digit, and only 4 of the 13 slid down a bit. By
expanding their CATV product offerings Emcore Corp. (trading symbol: EMKR) experienced
a good drive upwards on news of a 57% increase in revenue from a year ago and
thinks it can bring in $34-35 million more in revenue next quarter. Thus, hope
springs eternal... even in the telecom sector.
If you recall, I announced my official entry into the CS stock investment field
(and resulting loss of journalistic innocence) in previous columns. (Ref:
May 6,
June
1 and July
5.) The rationale for finally entering the investment game was fully
explained in those columns, so I'll not repeat my overall motivations only to
say that, after tracking the field for 30 years now, it's a novel personal thrill
to view our compound semi (CS) and solid state lighting (SSL) industries from
the investor's perspective. The portfolio is now officially in place and 100
shares of each of 13 companies have indeed been purchased in my name, following
the appropriate pre-announcements of my intent to do so. What I will do from
now on is provide our readers of CompoundSemi News and LIGHTimes
with monthly updates and my personal analysis of how the portfolio is performing.
Caution: Those who know my writing style as an advanced technology columnist
know that said reports aren't likely to be what you see from mainstream financial
analysis sources.
The Lucky 13 include (listed in the order I elected to buy them, with the
original price paid in the June-August timeframe, followed by the price as of
August 3, 2005): Emcore (EMKR: bought at $3.63) has risen to $4.54,
Cree (CREE: bought at $24.27) has risen to a very impressive $29.16,
TriQuint (TQNT: bought at $3.37) moved up to $3.80, Color Kinetic (CLRK:
bought at $11.27) moved up to $12.24, Andigics (ANAD: bought at $1.51)
climbed to $2.57, JDS Uniphase (JDSU: bought at $1.60) dropped a bit
to $1.52, Spire (SPIR: bought at $4.50) jumped rather dramatically to
$9.87, RF Micro Devices (RFMD: bought at $5.25) has risen to $6.36, Kopin
(KOPN: bought at $4.43) has risen to $5.40, WJ Communications (WJCI:
bought at $2.06) slid to $1.39, Vitesse (VTSS: bought at $2.52) slid
a bit to $2.23, Aixtron (AIXG: bought at $3.64 just the other day) rose
a smidge already to $3.71 and AXT (AXTI: bought the same time at $1.25)
slid a bit to $1.19 today.
So there's my "Lucky 13," which I hope to keep a long, long time.
Doing the basic math and rounding off just a bit, for the initial $7,000 investment
in the entire CS stock portfolio, after just a couple of months it's now worth
$8,400. Like I said originally when kicking off this project, with only 100
shares in each of the 13 companies, this is far from high stakes investing so
there's not much real money at risk. While I'm not likely to get rich off an
upturn... you never know in our business. While it remains a disappointingly
unsettled world, the global marketplace is clearly growing rapidly and all of
these companies are global players. In fact, the Lucky 13 were among the first
to simply shake their heads at these outdated nationalistic notions and have
stature and involvement in many different countries. The fact that the vast
majority of the 13 rose at least a dollar each in value over the last month
says to me there is indeed a basic upturn trend in our CS and SSL industries.
The fact that Spire and Cree made significant strides is downright exciting!
My investment in Spire just about doubled in one month from a purchase price
of $4.50 to today's quoted price of $9.87. Of course, when you're dealing in
single digits, as is the case with the vast majority of the portfolio, it doesn't
take much to mark a major percentage leap or decline. But Spire's leap forward
is impressive by anyone's math. The Cree stock was purchased at $24.27 which,
at the time, represented the most expensive stock price of the batch. Now approaching
the envious $30 mark, I'd say Cree is continuing to live up to expectations.
Everyone expects a lot from Cree as they always have. Especially Cree people
themselves. It's good to be on the winning team and... like I wrote last year
about this time in this space (long before considering the portfolio)
"Never
Underestimate Cree". I've tracked Cree since its inception, (see
litany
of online coverage on this site). The company will continue to do well
for years to come because it's truly are a modern day Intel. Now that I've actually
put my own money into shares of Cree stock (albeit a very small amount, but
hey, at 100 shares of each, it makes the math soooo easy), I must admit
a bit of a thrill seeing the upward performance and equating that with the fact
that I made almost $500 on Cree alone, and $1400 overall, without doing a thing!
What a concept!!! I could learn to like this investing thing. I can see why
people who are really rich get into the investment game. Add a few more zeros
to the left of the decimal point and I imagine the thrill grows exponentially.
But I'm not in this to play. I'm probably the most patient, long term investor
they'll ever see. I'm in it for the long haul because these are industries I've
been involved in, up close and personal, for over 30 years now. Why not plan
a little retirement nest egg around the primary players of a field I know and
love. This is also the first time I've had the personal capital to risk. At
my financial level, I take gaining or losing $6,000 very seriously. I weighed
that against the fact that I truly believe, passionately, in compound semi and
solid state lighting solutions. I truly believe what these industries create
are much needed in the world and overall, contribute to the betterment of life.
I'm on record as concurring that there would be an overall upward trend for
everyone, starting this summer, mainly because there was no way to go but
up! Times have indeed been hard and continue to be hard. But I truly believe
we're over the hump now. With the exception of Cree and Color Kinetics, CS industry
stocks appeared to me to be at an all-time low at the start of the summer. I
felt it was already a little late to get in to investing in Cree and CK as they
were already pushing my price limit. It's much easier to say yes to a stock
costing between $1 and $3 but double digits still make me nervous when I'm on
the buying end. Cree and CK, however, were irresistible because they have both
become such key leaders in the SSL industry which was doing well despite the
depression.
Spire's stock performance didn't surprise me either. I continue to be surprised
that it's taken this long to get moving. Contrary to most in the portfolio,
Spire isn't wholly in the compounds. While Spire is a pioneering CS industry
company, they departed from that business for awhile and became highly diversified
in silicon-based solar, a variety of products for biotech, and continues to
serve the defense industry. Spire's newly back into the CS foundry field. The
stock price undoubtedly shot up due to the announcements of various recent contract
wins in its non-CS related businesses. What I invested in was primarily Roger
Little, Spire's founder and CEO. Roger's my age, an old friend, who still shames
everyone our age (65) by continuing to participate in the grueling Iron
Man triathlon physical competition. Roger sensibly brought his son,
Mark Little into the company, which gave me even more confidence in Spire (ref:
our
coverage of Mark's appointment to the Spire board in May of '04). I'm
a big believer in family-based business.
So that's how things shape up as of early August, 2005. I'll report on the
portfolio progress the first week of each month. I may add to the holdings,
in breadth and depth, out of the profits but I seriously doubt I'll sell any
of the shares for a long, long time. A couple of years from now when things
settle back to normal (whatever that is), I predict the overall CS and
SSL industries will be robust again and stock prices for publicly held companies
in our space will be back to more normal conditions. Full employment for all
our fine technical people, worldwide, remains the goal. I doubt if we'll ever
see the super boom times again and triple digits, but hey... you never know.
Google (symbol: GOOG) remains
my ideally typical role model. Hittite, a design house that uses a variety of
merchant CS foundries to fab their chips, went public today on the Nasdaq (symbol:
HITT opening their IPO today
at $17 per share and closing near $20 netting $76.5 million for the company's
coffers in one quick day. That's a pretty good initial hit for HITT. With Hittite
going public, I get the feeling others in our space will start feeling brave
and begin rethinking IPO thoughts. If so, please... keep me informed.
If you have questions about the
solid state lighting and compound semiconductor industries or have news
or views to share, I'm Jo Ann McDonald, Editor of LIGHTimes and CompoundSemi News.
Feel free to contact me directly, anytime. 
My direct tel at the ranch is
+1-325-463-5345
From time to time Jo Ann may comment on companies in which she holds a
modest investment - be sure to read
her disclosure at some point in time... |
