Revenue Surge Sends Stock Soaring

An 86 percent year-over-year increase in quarterly revenue and earnings for the fourth quarter that beat Wall Street expectations helped IPG Photonics Corp. spur a laser company stock surge of nearly 5 percent on Friday morning.

IPG reported an 86 percent year-over-year increase in revenue for the fourth quarter of 2010, to $101 million. Earnings for the quarter of 56 cents per share (up year-over-year from 7 cents a share) beat Wall Street expectations by 3 cents per share. The company's financials for the year were just as strong: Revenue for the year increased 61 percent to $299 million, up from $186 million one year ago, and net income for the year surged from $5.4 million $54 million, resulting in earnings for the year increasing more than 800 percent, to $1.13 per share.

By midday Friday the news sent the price of IPG's stock up 12 percent, according to the website Tickerspy, and also lifted shares of Newport (4%), Coherent (2%) and II-VI (2%), among others.

"Geographically, we achieved sales growth in every major region, with China and Europe reporting the largest year-over-year increases of 256 percent and 92 percent for the quarter, respectively," said Dr. Valentin Gapontsev, IPG Photonics CEO. "Materials processing, our largest market, was our strongest application in the quarter, with a 106 percent increase in sales from the fourth quarter of 2009. We are seeing increases in acceptance of fiber lasers for materials processing applications across a variety of the largest laser applications such as cutting, welding, marking and engraving. Telecommunications sales increased 43 percent year-over-year and advanced applications sales grew 39 percent. The only market that experienced lower sales was medical, which was primarily related to lower demand from our main OEM customer."

Gapontsev attributed the surge in sales for the year to "strong demand for high power and pulsed lasers, growing acceptance of fiber lasers in different applications and a recovering global economy.

"The sales growth we achieved in 2010 was the result of growing industry acceptance of the superiority of fiber lasers and our products, especially in materials processing applications," Gapontsev said.

He added that the company will continue "to drive the proliferation of fiber lasers in new and existing applications. We plan to continue to invest in product and manufacturing technology development, capacity expansion and sales and service infrastructure to meet growing demand and capitalize on growth opportunities."

Looking ahead to the first quarter of 2011, IPG said it expects revenues in the range of $89 million to $95 million, with earnings in the range of 37 to 44 cents per share. Analysts have said they expected guidance closer to 37 cents.

"Seasonally, the first quarter is historically the lowest. We began 2011 with strong order flow, and anticipate that IPG will report strong year-over-year sales and earnings growth for Q1 to begin what should be an excellent year for IPG," Gapontsev said.

For more information, visit: www.ipgphotonics.com

Melinda Rose
Senior Editor