Kopin Corp (NASDAQ:KOPN)

CAPS Rating: 3 out of 5

A developer and manufacturer of III-V products and miniature flat panel displays. Commercially develops and manufactures Gallium Arsenide-based heterojunction bipolar transistor wafers and other commercial semiconductor products.

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Player Avatar NetscribeTech (< 20) Submitted: 3/22/2007 8:13:23 AM : Underperform Start Price: $3.55 KOPN Score: +29.81

Kopin Corporation produces lightweight, power-efficient, ultra-small liquid crystal displays (LCDs) and heterojunction bipolar transistors (HBTs) and other commercial semiconductor products that use Gallium Nitride and Gallium Arsenide-based substrates. The company's unique HBTs, have been integrated into billions of wireless handsets as well as into WiFi, VoIP and high-speed Internet data transmission systems to enhance their battery life, talk time and signal clarity.
The company reported total revenue for the fourth quarter of 2006 of 17.9 million as compared with 24.9 million revenue in the fourth quarter of 2005 and 15.6 million in the third quarter of 2006. For the year ended December 30th, 2006, total revenues were 71.1 million compared with 90.3 million for 2005. The company’s sales are concentrated to a small group of customers and Skyworks one of the biggest customers accounted for 49% of the total revenue. This is a risky thing for the company as any pullback from this customer will cost heavily for the company in terms of revenue. Moreover a large part of the revenue is also contributed from military and some publicly traded companies beginning in 2007 could pull this revenue from the company.
The goods from the electronic equipment industry are used by other manufacturing industries as inputs for their finished goods. The slowdown in the U.S. construction market over the past quarter and a moderate GDP growth due to soft housing and auto markets. Given the industry’s nature to move in tandem with the broader market and the sensitivity of this industry to macroeconomic trends, the current slowdown is expected to damper the growth momentum of the industry which is expected to extend beyond 2007 This slowdown in the industry is expected to affect the revenues of the company on a large scale and the increasing cost of raw materials could bring the margins further down, hampering the stock performance.

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