SDL Acquires Laser Marking Start-Up

Michael D. Wheeler

SAN JOSE, Calif. -- In a rare case of a component manufacturer purchasing one of its own customers, SDL Inc. has acquired all the outstanding shares of the privately held Mr. Laser Inc. for $1.2 million in cash. The acquisition provides SDL with an entry into the growing laser materials processing and marking systems market.
"SDL's strategy is vertical integration. We are trying to move up the value chain from being just a component supplier to a systems manufacturer," said John P. Melton, SDL's executive vice president. SDL, which employs more than 250 people, manufactures GaAlAs, InGaAs and InGaAlP laser diodes and systems, laser diode drivers and accessories.
In February, SDL introduced its line of high-power fiber lasers. One of the company's biggest customers for the fiber laser was Mr. Laser, a two-man start-up company also in San Jose, which featured the laser in its line of compact laser marking systems.
Mr. Laser's small size prevented it from accessing the laser materials market, according to Donald R. Scifres, SDL's president and chief executive officer. That market is now estimated to be $800 million.

Software, scanning expertise
Mr. Laser brings to SDL the software and beam-scanning technology required to address the new markets. The start-up will be integrated into SDL's Systems Group, and its management team will remain.
SDL posted revenues of $66.5 million for the first nine months of 1997, an increase of 8 percent. During that same period, net losses totaled $26.5 million vs. income of $5.5 million. Revenues reflect strong customer demand for SDL's line of 980-nm pump modules.
Melton projects a growth in sales for this year of between 25 and 30 percent. Beginning in 1998, SDL will begin shipping Mr. Laser's marking system, though Melton said revenues from the system likely will account for only a few percentage points of the projected growth.