ESI warns of wider losses

24 Apr 2014

Results for the laser micromachining company's closing quarter of fiscal 2014 will be worse than forecast.

Electro Scientific Industries, the Portland, Oregon, supplier of laser microfabrication equipment, has warned that its financial results for the March quarter will be significantly worse than expected.

The company, which recently disposed of former CEO Nick Konidaris, says that sales for the quarter will now come in at $37 million – down sequentially and nearly 10 per cent below the expected $40 million.

The lower sales mean that adjusted losses for the quarter will now range between $0.16 and $0.18 per share, higher than the guidance range of $0.09 to $0.14 per share previously anticipated by the company.

Formal "GAAP" results will also include additional write-downs of inventory related to discontinued products and other charges, which could further widen the quarterly loss.

"Contributing to the loss were higher expenses related to the first shipments of both gen 4.5 and gen 6 glass cutting systems to touch panel manufacturers, and the shipment of a development tool for a leading semiconductor manufacturer," explained ESI in a Securities & Exchange Commission (SEC) filing, adding that orders for the quarter were approximately $32 million – down from $35.6 million in the third quarter.

No short-term fix
Ed Grady, who replaced Konidaris as the CEO of ESI in February on a base salary of $590,000, said in a statement: "Sales and orders for the quarter came in below our expectations. Our markets were challenging, and anticipated demand for advanced microfabrication tools did not materialize. While we do not expect a meaningful increase in orders in the near term, we continue to see multiple potential opportunities for new applications."

He added: "These results make clear the need for ESI to broaden our target industry and application set within the laser material processing market. As we make these changes we expect our revenue opportunities to grow, which, in turn, should reduce the volatility of our results. We are focused on transforming ESI into the premier value leader in laser-based micromachining applications."

ESI has recently turned its focus to the emerging opportunity in laser micromachining of glass, making some strategic acquisitions in the process. In June 2012 it bought the French fiber laser start-up EOLITE Systems, before last year snapping up the semiconductor systems business unit from restructuring GSI Group.

ESI will update the stock market on its financial results for the fourth quarter and full fiscal year 2014 after the market closes on May 13.