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SMT & Inspection | May 04, 2009

Orbotech's revenue decreases to $91.9 million in 1Q/2009; management changes announced

Revenues for 1Q/2009 totalled $91.9 million, compared to $129.2 million recorded in the 4Q/2008 and the $100.5 million recorded in the 1Q/2008. GAAP net loss for 1Q/2009 was $7.9 million, compared to GAAP net loss of $101.2 million for 4Q/2008 and GAAP net income of $3.7 million in 1Q/2008.
Non-GAAP net loss for 1Q/2009 was $1.4 million, compared to non-GAAP net income of $6.0 million in the first quarter of 2008.

Sales of flat panel display (“FPD”) inspection equipment were $50.0 million, compared to $76.4 million in the fourth quarter, and $20.4 million in the first quarter, of last year. Sales of equipment to the printed circuit board (“PCB”) industry were $10.6 million in the first quarter of 2009, compared to $14.7 million in the fourth quarter, and $36.5 million in the first quarter, of 2008. Sales of automatic check reading products were $1.4 million, compared to $3.0 million in the fourth quarter, and $2.0 million in the first quarter, of 2008. Sales of medical imaging equipment in the first quarter of 2009 were $3.7 million, compared to $3.7 million in the fourth quarter, and $8.0 million in the first quarter, of last year. In addition, service revenue for the first quarter of 2009 was $25.5 million, compared to $28.8 million in the fourth quarter, and $25.5 million in the first quarter, of 2008. Revenue data presented in respect of the first quarter of 2008 does not include revenues attributable to the business of Photon Dynamics, Inc. (“PDI”), which was acquired on October 2, 2008.

The Company completed the quarter with cash, cash equivalents and marketable securities of approximately $119 million, compared with approximately $125 million at the end of 2008 and $160 million in debt, which it borrowed from Israel Discount Bank in connection with the PDI acquisition. The Company’s marketable securities included approximately $18.2 million of auction rate securities primarily tied to student loans, in respect of which the Company recorded a $2.4 million impairment to the income statement during the quarter.

As previously announced, during the second half of 2008, in light of the difficult worldwide economic conditions, the Company adopted measures designed to re-align its infrastructure. These measures, combined with the operational synergies relating to the PDI acquisition, have resulted in quarterly cost savings to date of approximately $18 million. Additionally, the strength in the United States dollar vis-à-vis the Sheqel positively impacted the Company’s results by approximately two cents per share in the first quarter of 2009 compared with the fourth quarter of 2008.

In April 2009, the Company received acceptance for its new FPD-AOI systems delivered to Sharp’s Generation 10 LCD manufacturing facility in Japan during the fourth quarter of 2008. Revenues for these systems will be recognized in the second quarter of 2009 and revenues for future systems for this facility, most of which are also expected to be delivered in the second quarter of 2009, will be recognized upon delivery.

Recently, electronics industry manufacturers have been reporting lower inventory levels, which have led to some degree of LCD panel and PCB price stabilization, in turn giving rise to an increase in customers’ capacity utilization. Nevertheless, there can be no assurance as the extent to which this may continue, since overall industry visibility remains relatively limited.

The Company also announced certain changes in senior management which will become effective on July 1, 2009. Mr. Arie Weisberg, who currently serves as President and Chief Operating Officer of the Company, has decided to retire from the Company following 18 years of service. Mr. Asher Levy, who has been with the Company since 1990, has been named to the position of Deputy Chief Executive Officer - Global Business; Mr. Amichai Steimberg, who has been with the Company since 1992, has been named to the position of Deputy Chief Executive Officer - Global Finance and Operations; and Mr. Erez Simha, who has been with the Company since 2004, has been named to the position of Chief Financial Officer.

Referring to these management changes, Mr. Cohen added: “I would like to express to Arie Weisberg, personally and on the Company’s behalf, my sincere appreciation for many years of outstanding dedication and service, and for his singular contribution to the Company’s development and success. We are pleased to announce the appointments of Asher Levy and Amichai Steimberg to the positions of Deputy Chief Executive Officer, and of Erez Simha as Chief Financial Officer. Asher, Amichai and Erez will draw on their substantial knowledge and experience in their particular areas of expertise and in the capital equipment industry in general, and have my unequivocal support as well as that of the entire Board of Directors.”

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