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RUBICON TECHNOLOGY, INC (RBCN) |
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WIKI ANALYSIS
Rubicon Technology, Inc. (RBCN) is an electronic materials provider, which develops, manufactures and sells monocrystalline sapphire and other crystalline products for light-emitting diodes (LEDs), radio frequency integrated circuits (RFICs), blue laser diodes, optoelectronics and other optical applications. Rubicon is an integrated manufacturer of sapphire substrates and optical windows, which are used in a range of applications.[1] Despite growth and improved performance, the company's stock is one of the most shorted stocks in the NASDAQ index.[2]
Business Growth
Revenue was $77.4 million for the year ended December 31, 2010 and $19.8 million for the year ended December 31, 2009, an increase of $57.6 million. The company attributes this dramatic broad-based improvement to the improved market and pricing environment.[3] Net income margin is at 38% in 2010, a substantial improvement from a net margin of (48)% in 2009.[3] In order to cut costs, the company reduced R&D expenditures and cut R&D personnel in 2010, although the company believes that its R&D expenses will generally increase as it continues to develop new products.[3]
Key Trends and Forces
Significant growth opportunity in the high-end lighting and notebook markets
Rubicon's technology is well suited for the lighting market with the trend in motion away from the incandescent lightbulb to the LED lightbulb. Another area of LED application is the TV, PC and notebook display market. Notebooks is the most important of the three, since the incremental cost of using LEDs in notebooks is substantially lower than in TVs and high-end monitors. Most of the top notebook makers in the U.S. are optimistic about using LEDs in notebooks. Both HP and Dell already have LED-based models, and Apple has followed suit with its LED Cinema Display.
The market is characterized by commoditization
While the demand for LEDs is likely to increase, prices for LEDs, its manufacturing components, and sapphire are likely to weaken. LED prices have fallen in seven of the last eight quarters. Analyst reports indicate that prices for LEDs may plunge up to 90% over the next three years as competition in the industry intensifies and commoditization of the goods result.[4] This will greatly reduce Rubicon's high net margins.
Competition
Rubicon's main competitors are:
- Cree (CREE)
- SemiLEDs Corporation (LEDS)
- Soitec (EPA:SOI)
- Veeco Instruments (VECO)
- Aixtron Aktiengesellschaft (AIXG)
Various private companies exist that also compete with Rubicon. The industry is intense with competition and companies try to improve their products and streamline their processes to cut costs and lower prices.
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