OXFORD, Mass., May 6, 2009 -- High-power fiber laser maker IPG Photonics Corp. reported Tuesday that its net income for the first quarter of 2009 dropped 84 percent from the same quarter a year ago, to $1.3 million, and revenue decreased by 14 percent year-over-year. The news was worse than analysts had predicted and sent the company's stock on a double-digit slide Tuesday afternoon.
The company said the revenue decline for the first quarter, which ended March 31, was primarily the result of lower sales of pulsed lasers for materials processing applications. The drop in net income was attributed primarily to first quarter inventory write-downs and revaluations of $2.7 milllion, $1.5 million in foreign exchange loss related to the ruble and euro, and an increase in the company's bad debt reserve.
Looking on the bright side, IPG CEO Dr. Valentin Gapontsev said, "Despite challenging conditions, high-power lasers, now our largest product line, grew 18 percent year-over-year. In addition, applications other than material processing grew by 22 percent."
The company's earnings per share for the quarter plummeted 83 percent, from 18 cents a share last year to 3 cents. Wall Street analysts had been expecting earnings of 11 cents a share.
Gapontsev said IPG's strongest market was North America, which saw a 39 percent sales increase year-over-year. Growth in Japan was offset by weakness in China, with overall Asian sales declining by 27 percent for the quarter. European sales slid 33 percent from a year ago.
Looking ahead to the second quarter, the company said it expects the economic downturn to continue to have a negative effect, especially in materials processing. IPG said it expects revenues in the range of $39 million to $45 million, with earnings of 1 cent to 7 cents a share. According to Reuters Estimates, analysts have forecasted IPG to report revenue of $46 million and earnings per share of 12 cents for Q2.
Gapontsev said the company will continue to invest in new sales and applications personnel, as well as research and development for new products, while continuing to focus on controlling costs and expenses and reducing inventory.
IPG's stock began Tuesday at $11.22 a share, and declined by $1.31, or more than 11 percent, over the day, ending at $9.91. By Wednesday morning it had rebounded more than 4 percent to $10.39 a share.
For more information, visit: www.ipgphotonics.com