Rubicon plant shutdown results in 3Q share loss
BENSENVILLE - Rubicon Technology said write down costs associated with the closing of a plant in Malaysia resulted in a 94 cent loss per share in the third quarter of 2016.
The company reported the one-time charges to close the Malaysia facility and exit the LED market included a $10.2 million asset impairment for writing the Malaysia assets down to liquidation value, a write-down of $4 million in excess raw material inventory, and $900,000 in accrued severance. In addition, the company recorded a write-down of $2.3 million of excess two-inch core inventory, which is sold primarily into the mobile device market, and severance of $180,000 for reduction of staffing in the U.S.
In September, the company said it shut down its Penang, Malaysia facility, with production ending by Nov. 30. The facility produced polished and patterned substrates for the LED market. At the time, company officials said it would focus on the optical and industrial sapphire market for the foreseeable future.
"While margin pressure in the LED and mobile device segments of the sapphire market continue to be severe, there remains good margin opportunity in the optical and industrial segments," said Rubicon CEO Bill Weissman. "We believe that the actions we are taking will improve our operating results, strengthen our cash position and allow us to grow in strategic markets that are better aligned with our strengths while offering stronger margin potential.
"Once the changes are fully implemented, our revenue will be smaller for a period of time, but the optical and industrial sapphire markets are growing with potential new applications for sapphire emerging," he added.
The company reported third quarter revenue of $7.1 million, $3.6 million higher than the prior quarter revenue. Revenue from wafer sales in the third quarter was $5.5 million as compared with $1.8 million in the prior quarter. The higher wafer revenue was the result of increased orders from a key patterned wafer customer along with that customer drawing down all wafers in consignment inventory.