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WIKI ANALYSIS
Newport
Newport is engaged in offering advanced technology products and systems. Its products find their application in several industries such as scientific research, microelectronics, aerospace defense and security, life and health sciences, and industrial manufacturing.
Business Overview
Newport Corporation was founded in 1969. The company is now a leading worldwide supplier of technology products and solutions for Life and Health Science, Industrial Manufacturing, Semiconductors, Scientific Research, Aerospace and Defense, Photovoltaics, and Microelectronic markets. Newport has acquired extensive knowledge over the 40 years they’ve been around which allows them to continually deliver innovative products in areas such as, photonics instrumentation, vibration isolation, lasers, and many other in depth segments. Newport also has a long history of partnering with original equipment manufacturer customers where they deliver comprehensive solutions in the areas of design, testing, and manufacturing. Newport today is known for their industry leading brands such as New Focus, Oriel Instruments, Corion, Richardson Gratings, and Spectra-Physics.[1]
Newport's Brands
- New Focus-New Focus is Newport’s most recent acquisition. It was acquired in 2009 and they are involved in developing, manufacturing and delivering innovative and quality photonics for industrial and research applications all over the world.[2]
- Oriel Instruments-Newport founded Oriel Instruments at the start of the company and is was quickly recognized as an innovative supplier of products that make and measure light. The Oriel Instruments brand today includes leading products such as all kinds of light sources covering a wide range from ultra violet to infrared and low and high powered sources. Oriel Instruments is best known in the Photovoltaics area where they offer solar simulators that allow their customers to simulate hours of solar radiation in just minutes.[3]
- Spectra-Physics-Newport acquired Spectra-Physics in 2004. This acquisition greatly expanded the scope of Newport’s product offerings and allowed them to expand their target market. Spectra-Physics offers things such as high-power diode lasers, gas and dye lasers, and ultrafast laser systems. They also offer photonics instruments such as monochromators, optical filters, spectroscopy, and many others. Spectra-Physics was the first commercial laser company and partnered with Newport they continue to deliver innovative laser products and solutions that facilitate new applications.[4]
- Richardson Gratings-Newport’s Richardson Gratings is a global leader in the design and manufacture of diffraction gratings for telecommunications, spectroscopic, and laser applications. Richardson Gratings focuses on two core competencies. The first one is the generation of master gratings and the second one is replicating optically equivalent copies of those master gratings so they can produce large quantities for a cheaper price. Both of these core competencies help meet the demands of their customers which includes delivery of the products on time all while meeting every technical requirement.[5]
Business Segments
Laser Division
The Laser Division was formed in July 2004 which was connected with the acquisition of Spectra-Physics. The main products offered in this division can be categorized into ultrafast lasers and amplifiers, diode-pumped solid-state lasers, diode lasers, high-energy pulsed lasers, tunable lasers, gas lasers, and fiber lasers and amplifiers. Along with these products offered, Newport also works closely with their original equipment manufacturer customers to design and develop lasers and laser systems optimized for their product and technology plans.[6]
Photonics and Precision Technologies (PPT) Division
This division offers numerous products and systems related to photonics. The main products offered in this division can be classified into photonics instruments and systems, precision micro-positioning systems and subsystems, vibration isolation systems and subsystems, optics, optical hardware, opto-mechanical subassemblies, and crystals. This segment also supplies automated systems and subsystems for advanced applications in the manufacturing of communications and electronic devices.[7]
Industry Analysis
Companies in the scientific and technical instruments industry have experienced strong revenue growth in recent years. Persistent corporate and state spending and consolidation within the industry were key drivers of growth. In this scientific and technical instrument market, input prices and labor costs are increasing. However, end-users in the semiconductor, networking, and similar industries must compete through non-stop innovation, which increases demand for instrumentation and test gear. Long-term increases in healthcare spending will sustain demand for medical instrumentation, while the expanding defense and homeland security budgets will also be a key determinant of revenues for scientific instrument manufacturers.[8]
Newport’s Markets
Newport sells their products and systems to original equipment manufacturers and end-user customers in markets that are enhanced by the use of photonics technology, including mainly:
- Scientific Research- Newport is one of the world’s leading suppliers of photonics products to scientific researchers. For almost 50 years Newport has worked with the scientific research community to create new technologies and applications. Today they help researchers expand the limit of science in an assortment of research areas including spectroscopy, ultrafast phenomena, terahertz imaging, laser-induced fluorescence, chemical analysis, materials science, light detection and ranging (LIDAR) and nonlinear optics.
- Microelectronics- Newport’s products support many essential applications in the microelectronics market. They are an important supporter of the semiconductor industry by creating smaller chip sizes with useful functionalities that are needed for next-generation consumer technology products, including digital cameras and cell phones. Newport’s products are also crucial for the manufacturing of solar panels with higher efficiency but at a lower cost. There are many other applications that Newport’s products support in the microelectronics market such as solar cell testing, semiconductor lithography, reticle inspection, wafer inspection and metrology, and many others.
- Life and Health Sciences- Photonics technology has become increasingly important in the life and health sciences industry. Newport provides products for diagnostic and analytical instrumentation and bioimaging. Also their products are used in applications including optical coherence tomography, laser microdissection, flow cytometry, multiphoton and confocal microscopy, and many others.
- Aerospace and Defense/Security- As weapons become more technologically advanced it increases investment in the photonics-based technology that can swiftly and noninvasively detect threats. It can also improve intelligence gathering, provide secure communications systems and improve the performance of weapons and countermeasures. Newport’s high precision products are used in the aerospace industry by helping engineers create, assemble, test and standardize equipment. They are also integrated into sensor systems for applications including target recognition and acquisition, LIDAR, range finding, missile guidance and advanced weapons development.
- Industrial Manufacturing- Newport’s photonic products are used in a wide range of industrial manufacturing applications. Some of these applications include micromachining, welding and soldering, illumination, cutting, rapid prototyping, and heat-treating.[9]
Customer Base
Newport Corporation sells their products to customers worldwide in a broad range of markets. The main markets they sell to are scientific research, microelectronics, aerospace and defense/security, life and health sciences and industrial manufacturing which are mentioned in an earlier section. Newport has great customer diversification which minimizes their reliance on any single industry. In 2010, no single customer represents 10% or more of their net sales. For certain end markets such as the microelectronics market, a small amount of customers are responsible for a considerable part of their sales. Sales to one customer by the Photonics and Precision Technologies division in 2010 represented about 10% of that division's net sales. Newport believes that their relationship with their customers, especially the main ones, are very strong. However, if for some reason their key customers terminate or decrease their business with Newport it could have a huge negative financial impact. For example, from 2007 to 2010, a number of their key customers in the semiconductor equipment industry suffered from major declines in their businesses because there was a cyclical recession in that industry. If Newport loses business from their key customers and are unable to expand into other markets their business would be hurt greatly.[10]
Newport's Competitors
Newport has many competitors because they serve so many markets but their two direct competitors are Agilent Technologies Inc. and Corning Inc.
- Agilent Technologies (A).- Agilent Technologies is the world’s leading measurement company providing core bio-analytical and electronic measurement solutions to many industries including the communications, electronics, life sciences and chemical analysis industries. They have three business segments consisting of the electronic measurement business, the chemical analysis business and the life sciences business. Agilent’s electronic measurement segment deals with the communications, electronics and other industries. Their chemical analysis segment focuses on the petrochemical, environmental, forensics and food safety industries. Their life sciences business focuses on the pharmaceutical, biotech, academic and government, bio-agriculture and food safety industries. Along with their three business segments, Agilent does research through Agilent Technologies Laboratories. Each of their business segments is supported by their worldwide infrastructure organization, which provides shared services in the fields of finance, information technology, legal, workplace services and human resources. Agilent sells their products mostly through direct sales, but they also use resellers, manufacturer’s representatives, distributors, telesales and electronic commerce. They currently have 18,500 employees worldwide with their main manufacturing sites located in California, Colorado and Delaware, Australia, China, Germany, India, Italy, Japan, Malaysia, Singapore and the United Kingdom.[11]
- Corning Inc. (GLW)- Corning is the world leader in specialty glass and ceramics, creating a foundation for components that enable high-technology systems for five different markets including Display Technologies, Telecommunications, Environmental Technologies, Specialty Materials and Life Sciences. In the Display Technologies segment, Corning manufactures glass substrates for active matrix liquid crystal displays (LCDs), that are used mainly in notebook computers, flat panel desktop monitors, and LCD televisions. For the Telecommunications segment, they produce optical cable and fiber cable, and hardware and equipment products for the global telecommunications industry. Corning serves the Environmental Technologies segment by manufacturing ceramic substrates and filter products for emissions control in mobile and stationary applications around the world. Their Specialty Materials segment manufactures products that provide more than 150 material formulations for glass, glass ceramics and fluoride crystals to meet the demand for specific customer needs. The last market Corning serves is the Life Sciences segment. This segment work together with researchers looking for new approaches to increase efficiencies, reduce costs and reduce timelines in the drug discovery process. By using great expertise in the fields of materials science, surfaces, and biology, Corning provides innovative solutions that improve productivity and facilitate breakthrough discoveries. Corning Inc. currently has 26,200 employees worldwide. [12]
Porters 5 forces
The Threat of the Entry of New Competitors
The threat of new entrants is pretty high in the industry. Many of Newport’s markets are characterized by swift technological advances, changing customer needs, evolving industry standards, new product introductions, and sometimes new disruptive technology comes along that shifts current technology. Due to these conditions, many products in Newport’s markets can become obsolete very fast. This gives an opening to prospective new entrants looking to take over some market share. Also certain markets in the industry experience extreme cyclicality in capital spending. This means if Newport fails to introduce new products in a well-timed manner they could miss a period of market growth where other companies can gain an advantage. Entry of new competitors can also come from Newport’s current or potential customers. They may have developed or will develop products that could be competitive with Newport’s products.[13]
Rivalry among existing competitors
Newport competes in several specific markets, against a limited number of companies in each market. The markets that Newport serves are very competitive and distinguished by rapidly changing technology. Newport is up against companies such as Corning Inc. and Agilent Technologies Inc, who have longer operating histories, better name recognition and considerably better technical, financial, manufacturing and marketing resources than they have. Also some of Newport’s competitors have established relationships with their customers and potential customers in their markets. Along with current competitors Newport believes that new competitors with more resources than they have will try to offer products to their same markets which will hurt the company. Newport also has other competitors that are small and extremely specialized firms that are able to focus on only one portion of the market. [14]
Bargaining Power of Suppliers
Newport currently obtains various materials and components from a limited amount of sources because of the unique component designs and materials uniqueness needed to manufacture their products. In some cases, the number of suppliers available is limited because of patents covering the components or materials. Newport also manufactures some of their components in house and they are not available anywhere else. Many of Newport’s suppliers require long lead times to the deliver the quantities needed to they need to act in a timely manner.[15]
Bargaining Power of Buyers
The bargaining power of buyers is high in this industry. Even though Newport is involved in many markets, most of their sales come from large deals. If they lost the profit from these transactions it would greatly hurt their company. Newport is dedicated to maintaining their relationships with their large buyers so they don’t lose out on a big chunk of earnings.
The Threat of Substitute Products or Services
The threat of substitute products or service is pretty low in this industry scientific and technical industry. This is because many of the products are so complex and unique and not to mention expensive. The only real threat of substitutes is associated with the rapidly changing technology in the industry that opens doors for new and improved products.
Marketing Strategy (4 P's)
Product
Newport provides a large assortment of photonics technology and products designed to increase the capabilities and efficiency of their customers’ precision applications, including:
- Lasers and laser technology, including solid-state, gas and dye lasers, tunable lasers and ultrafast laser systems
- Optical components and subassemblies, including precision optics and opto-mechanical subassemblies, thin-film optical filters, and ruled and holographic diffraction gratings
- Photonics instruments and components, including optical meters, light sources, high-speed detectors and modulators, monochromators and spectroscopy instrumentation
- High-precision positioning and vibration isolation products and systems
Along with Newport’s individual products, they offer proficiency in integrating their products into systems that are designed to meet customers specific application requirements.[16]
Place
Newport’s corporate headquarters is located in Irvine, California. They currently lease this facility until it expires in 2022. Their primary manufacturing operations for each of their divisions can be seen in the table below.[17]
| Division | Primary Facility Locations | Approximate Facility Size |
| Lasers | Santa Clara, California | 139,000 square feet |
| Stahnsdorf, Germany | 12,000 square feet | |
| Irvine, California | 272,000 square feet | |
| Photonics and Precision | Rochester, New York | 58,000 square feet |
| Technologies | Franklin, Massachusetts | 56,000 square feet |
| North Billerica, Massachusetts | 41,000 square feet | |
| Stratford, Connecticut | 32,000 square feet | |
| Beaune-la Rolande, France | 86,000 square feet | |
| Wuxi, China | 64,000 square feet | |
| Brigueuil, France | 44,000 square feet | |
Promotion
Newport markets their products through their domestic and international direct sales organizations. They also market their normal products through their web site and their product catalog called the Newport Resource. The Newport Resources is mailed to about 40,000 existing and potential new customers. It is also accessible worldwide because they publish the catalog in quite a few languages such as English, German, Japanese, and Mandarin. Newport’s website also includes and online catalog that provides customers access to the most recent information about the products. There is detailed product information and extensive technical and applications data. Customers can also see reviews posted by other people which promotes the products by itself.[18]
Price
Newport’s products are particulary expensive considering the complexity of what they offer. They tailor their products to the needs of OEM’s and capital equipment. Since their products are so advanced they are very pricy.
SWOT Analysis
Strengths
Newport has many strengths and the biggest one is that they offer products to customers in many different markets. This diversity helps Newport reduce risk in case one of the markets experiences a downturn. Along with Newport’s individual product offerings, they have significant expertise in incorporating their products into systems and subsystems that are made to meet their customers’ specific application requirements. Newport believes that their ability to develop and manufacture integrated solutions along with their large portfolio of products and technologies, gives them an important competitive advantage. [19]
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Opportunities
Newport is currently pursuing three different opportunities for profitable growth. The first thing the company is trying to do is expand even more globally. In 2010 they worked on expanding their manufacturing and distribution capabilities in Asia. They are continuing to increase the level of activity at their factory in Wuxi, China which helps them lower their production costs and makes their products more competitive in global markets. The second opportunity is to expand the sales of subassemblies and subsystems that satisfy specific application needs of their customers. Newport is working on solutions that utilize their technologies to meet very specialized customer requirements. The third opportunity for Newport is in the form of acquisitions. They are continually evaluating acquisition opportunities that complement or add depth to their existing product lines. [20]
Threats
There are many current threats in Newport’s Industry. One of the biggest threats comes from the semiconductor capital equipment market. A large part of Newport’s business comes from the semiconductor market which is known to experience unexpected and severe cyclical differences in product supply and demand. It is very difficult to predict the cycles in this market which could hurt Newport because they won’t have enough time to respond effectively. During industry recessions Newport’s revenue could decline suddenly and drastically. Another big threat to Newport is that many of the markets and industries that they provide products for are susceptible to rapid technological change. Many of Newport’s products can become outdated quickly at the drop of a hat. If they fail to effectively introduce new, competitive products and technologies on a well-timed basis, Newport’s business could be affected greatly.[21]
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References
- ↑ Newport Company Overview
- ↑ Newport's New Focus Brand
- ↑ Newport's Oriel Instruments Brand
- ↑ Newport's Spectra-Physics Brand
- ↑ Newport's Richardson Gratings Brand
- ↑ 2010 Annual Form 10-K Pgs 4-6
- ↑ 2010 Annual Form 10-K Pgs 7-9
- ↑ Business and Industry Intelligence: Scientific and Technical Instruments
- ↑ 2010 Annual Form 10-K Pg 3
- ↑ 2010 Annual Form 10-K Pg 11
- ↑ Agilent Annual Report Pg 8
- ↑ Corning Inc. Annual Report Pgs 1-3
- ↑ 2010 Annual Form 10-K Pg 20
- ↑ 2010 Annual Form 10-K Pg 13
- ↑ 2010 Annual Form 10-K Pg14
- ↑ 2010 Annual Form 10-K Pg 1
- ↑ 2010 Annual Form 10-K Pg 20
- ↑ 2010 Annual Form 10-K Pg 10
- ↑ 2010 Annual Form 10-K Pg 2
- ↑ 2010 Annual Form 10-K Pg 2
- ↑ Newport Annual Report Pgs17-18, 20
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