Monday, April 9, 2012

Rubicon just got a big contract deal

Rubicon Technology(RBCN) entered into an agreement with a major LED chip manufacturer which begins April 1, 2012 and calls for the Company to provide six inch polished substrates from June 2012 through December 2012. The total value of the Agreement is approximately $20 million.

Compare that with the last quarter's revenue of  19.36 million for the entire company. It has an approximate fair value of 97% upside potential at the current $9.60 price.

There are a large number of shorts at this time.

 First Quarter 2012 Guidance from the CEO Mr. Parvez
Commenting on the outlook for the first quarter of 2012, Mr. Parvez said, “We are seeing signs of improvement in the LED market in the first quarter. Orders for two-inch through four-inch cores have begun to recover somewhat but, given that it is early in the recovery, prices remain low. Our LED customers have substantial inventory of 6 inch polished wafers, and we expect few orders from that market segment in the quarter. In the Silicon on Sapphire (SoS) market, demand for large-diameter wafers continues to grow, but this is a smaller market. As a result, we expect that total revenue for the first quarter of 2012 will be between $8 and $12 million. At this level of revenue, and with further reduced utilization in our fabrication and polishing operations this quarter, we anticipate a loss of between $0.10 and $0.14 per share in the first quarter. I believe that as pricing and utilization improve we will gradually move back to our targeted gross margin of over 40 percent.”

“We expect capacity utilization among the LED chip makers to continue to improve throughout the first half of this year,” Mr. Parvez said. “Looking beyond the first half of 2012, the outlook for sapphire substrates is for very strong growth, as LEDs gain momentum in the general lighting market, where LED penetration presently is only in the single digits, and as LED penetration into the auto market continues and the backlighting market strengthens. Rubicon continues to be the market leader in terms of capability and cost, and we are well positioned for the market rebound,” he concluded.

The first quarter ends March 31, 2012 and the unconfirmed release date is May 24th, 2012.

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