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12 Mar 2009

Green laser delays hinder Microvision, defence stays healthy for Kopin and StockerYale.

• The slowdown in consumer spending impacted the full-year financial results for Microvision, a US developer of ultra-miniature projection display and imaging products intended for use in pico-projectors, vehicle displays, and mobile devices.

Revenues fell to $6.6 million in 2008, compared with $10.5 million for the previous year, primarily due to deteriorating economic conditions and reduced contract activities. The company reported an operating loss for the year of $35.5 million, compared with $26.7 million for the same period in 2007, attributed to development costs associated with the planned introduction of products using its PicoP display engine.

"We have streamlined our 2009 operating plan by consolidating programmes to focus on two primary opportunities: launching our first PicoP enabled accessory projector and working with potential customers to develop several opportunities for PicoP embedded applications, including mobile phones for commercialization in 2010," commented CEO Alexander Tokman.

One particular hinderance for Microvision has been the protracted development of a suitable green laser for its projection systems, according to Tokman. "The longer-than-expected development cycles and lack of a detailed delivery schedule for green lasers has made it challenging to complete final product testing and customer agreements," he admitted. "As green laser suppliers move closer to commercialization in the next few months and finalize their delivery schedules, we expect to complete our final product testing and anticipate then signing customer agreements."

Tokman indicated that there remains tremendous growth potential in the global demand for pico projectors, as consumers become more accustomed to accessing information through mobile devices such as smart phones, mobile media players and ever smaller computers. It remains clear however that, for the moment, their spending on such devices has been put on hold.

• In line with results from other companies with interests in the defence sector, Kopin was able to report strong growth in those markets while other areas of its business suffered. Total revenues for 2008 hit a record $114.8 million, up from $98 million for the previous year. Display revenues increased approximately 24% to $67.8 million in the same period, reflecting higher sales of military displays.

Kopin expects revenues from military display products to continue to grow in 2009 as part of its strategy of focusing on higher-margin products. However, the global economic slowdown is expected to result in lower revenues from the sale of the company's commercial and industrial products.

"Display revenues from military applications increased more than 130% for the year and 150% in the fourth quarter compared with 2007's fourth quarter, driven by our participation in programmes to produce advanced soldier systems," said John Fan, Kopin president and CEO. "Coming off a year of record revenue we remain optimistic about the opportunities ahead, despite the challenging environment."

• Sales to defence customers also played a part in the results posted by StockerYale, which won a contract to supply reference lasers to BAE Systems valued at $2.1 million during Q4 2008. Full-year revenues for 2008 reached a record $32.1 million, up 7.5% on 2007, while gross profit rose by 26% to $11.3 million. The coming year remains uncertain, however.

"While pleased with both our quarterly and year-on-year performance, the recent downturn in the industrial market, the financial crisis and fluctuations in exchange rates impacted our fourth quarter results," said Mark Blodgett, StockerYale CEO. "We expect the environment will remain difficult and volatile."

Blodgett predicted that defence sales as a percentage of total revenues would increase in 2009. "We are working closely with one of the world's leading defence companies to develop our gain-switched pulsed thulium fibre laser technology," he commented. "We remain focused on selling new, higher margin products, and aggressively seeking opportunities to further reduce the company's cost structure."

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