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'Refocused' Rubicon reviews its options

10 Aug 2016

Sapphire crystal grower has already switched priorities to optical applications as overcapacity continues to plague key LED epiwafer market.

Struggling sapphire maker Rubicon Technology says that it is re-focusing its business on optical applications and considering ways to extract value from the company, as the LED and radio-frequency device sectors remain swamped by an overcapacity of the substrate material.

Reporting another drop in sales to just $3.5 million in its latest financial quarter, the Illinois company posted a net loss of $8.2 million for the three months ending June 30. That loss was close to a repeat of same quarter last year, despite major cost-cutting efforts in the meantime.

CEO Bill Weissman said in a company statement: “Given the excess capacity of sapphire serving the LED substrate and mobile device markets, we are placing more emphasis on the optical and industrial sapphire markets where we feel we have a greater competitive advantage.”

That would most likely relate to the military sector, where sapphire windows are valued for their infrared and ultraviolet transparency, combined with durability in extreme environments.

For the past few years Rubicon has been working on ways to fabricate very large sapphire windows, under a contract grant supported by the US Air Force Research Laboratory. Targets under the “Large-Area Net-Shape Crystal Extraction (LANCE)” development contract include producing 18x36 inch windows at a thickness of close to one inch.

Rubicon says it has now produced a window of that size, and had previously scheduled polishing for the second half of the year.

Sapphire coating technology
The company also has a new coating technique called “SapphirEX” that can be used to apply a sapphire layer on top of glass or other materials, offering a potentially lower-cost alternative to monocrystal sapphire but maintaining the benefits of scratch resistance.

But despite those ongoing innovations, Weissman also said that the company was now “reviewing a variety of alternatives” towards providing greater value to its beleaguered stockholders.

Long-term investors have seen the company’s value slide alarmingly over the past five years. In April 2011, with an LED manufacturing boom in full swing and before Apple’s ill-fated venture into sapphire production, Rubicon’s stock was trading at close to $30 on the Nasdaq exchange.

But after the latest financial update Rubicon’s stock lost further ground, slumping to a valuation of just $0.64 and a market capitalization below $20 million.

As of June 30, Rubicon had $17.1 million in cash and equivalents on its balance sheet – accounting for virtually the entire value of the company at present.

Rubicon’s management has also had to deal with dissident shareholders in the form of small-time holding company Paragon Technologies, who despite owning only a tiny proportion of the company’s stock had wanted to replace two directors on the firm’s board.

However, Rubicon shareholders rejected Paragon’s own nominees at the company’s annual meeting held at the end of June. That was shortly after the sapphire maker had appointed corporate finance expert Timothy Brog to its board to help shape and implement the kind of changes needed in such difficult market conditions.

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