Coherent up in Q2, but says science applications are down
Coherent Inc. recently reported a profit of $15 million (61 cents a share) for the second fiscal quarter of 2013. The company’s overall earnings were up slightly over the first quarter’s $14.2 million profit (58 cents a share), which resulted from $183 million in sales. Net sales for the second quarter, which ended March 30, were $200 million. While that was an increase over the second quarter of 2012’s sales total of $193 million, the company’s profit a year ago was higher at $16 million. The company ended the quarter with a cash balance of $204 million.
But the company did not see growth in products for scientific applications. “The only market to exhibit softness was the [scientific] research market, where stronger demand in Asia could not overcome the effects of sequestration in the US and belt tightening in Europe,” said President and CEO John Ambroseo. The company’s second-quarter sales in that market were $29 million, down 20 percent sequentially and 3.4 percent year-over-year. “Fortunately, our opportunities in the commercial market dwarf the downside risk in the scientific business.
“The biggest question facing the research market is what will future funding look like? Not surprisingly, the answer to this question is complex.” Under sequestration, the National Institutes of Health, National Science Foundation and the Department of Energy are all expected to cut their budgets between 5 and 7 percent for the full fiscal year and will likely reduce the number of grants they award.
“We think it is likely that spending in the life sciences will continue to outpace investments in the physical sciences,” Ambroseo said. “The gap may grow wider if the Obama administration’s initiative for studying the human brain ... receives more than its first-year funding of $100 million.”
The outlook for the European research market remains flat to slightly down for the rest of the fiscal year, he said. “The linchpin to the European research market is Germany’s DFG, which has not announced any funding cuts but may be slowing the approval rate for new grants. The EU is also sponsoring a Human Brain Project with €1 billion of funding over 10 years to 70 … agencies. Some of this money will trickle down to ultrafast lasers used in brain imaging.”
Bookings for medical OEM applications were at an all-time high, Ambroseo said, and benefited from Coherent’s December 2012 acquisition of Lumera Laser. Lumera and the company’s other recent acquisitions, Innolight Innovative Laser and System-technik GmbH and Midaz Lasers Ltd., added about $9 million in revenue for the quarter, said Chief Financial Officer Helene Simonet.
The company’s Instrumentation and OEM Components segment orders were up 40 percent sequentially and 52 percent year-over-year, to $47.4 million. Ambroseo said increased customer demand for lasik and other refractive surgeries resulted in increased orders for its ExciStar lasers. “Our Staccato laser used in cataract treatment also posted solid numbers.”
Coherent’s light engine products that combine multiple lasers and beam delivery are also gaining traction with OEMs, he said, and the DNA-sequencing market is also a growing opportunity for products that use lasers and/or LEDs as the light source.
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