For anyone who's interested, I've pulled out SDLI's numbers for the past 2 1/2 years as a comparison to VARL since both companies have moved from a focus on defense to communications, both are in fields with high barriers to entry --- with a high premium on patents --- and both have incurred large manufacturing costs ahead of expected sales.
First a comparison of their charts over the past 3 years.
quicken.com
Looking at SDLI, this past year's growth make the ups and down of the prior 2 years close to meaningless. I submit that if you chart 1997 to the end of 1998, you'll see a much bumpier picture. I also submit that based on what I know of the subscriber market, VARL stands a good chance of seeing similar growth and I'm guessing they're about a year behind in stock appreciation. Incidentally, if SDL's chart impresses you, consider the fact they just added a new facility this quarter. I could be wrong but I believe they're still in their infancy --- as is Vari-L.
Okay, now a series of earnings releases from SDL for anyone who wants to see what it takes to position a company for the growth they've seen. I've highlighted comments that show what the company was doing to reinvent itself along the way:
San Jose, California, April 17, 1997 -- SDL, Inc. (NASDAQ:SDLI) today announced quarterly revenues and earnings.
For the first quarter ended March 31, 1997, SDL reported revenues of $21.0 million compared to revenues of $20.4 million in the first quarter of 1996. This represents a 3% increase in revenues. First quarter 1997 net income was $0.5 million or $0.04 per share compared to a net income of $2.2 million or $0.18 per share reported for the first quarter 1996. Earnings per share for the first quarter of 1997 were computed based on 14.3 million weighted average shares, compared to 12.1 million shares in 1996.
In commenting on first quarter results, Dr. Donald R. Scifres, Chairman and CEO noted, Even though our financial performance for the quarter was disappointing, I believe we made significant progress towards our corporate goals and strategic directions in Q1. This included diversification into new lines of vertically integrated products, increased manufacturing capacity, improved yields on a number of products and significant new orders for value added products.Œ
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San Jose, California, July 21, 1997 -- SDL, Inc. (Nasdaq: SDLI)
For the second quarter ended June 30, 1997, SDL reported revenues of $21.6 million compared to revenues of $21.6 million in the second quarter of 1996. Second quarter 1997 net loss was $29.5 million or $2.19 per share compared to a net income, of $2.4 million or $0.20 per share reported for the second quarter 1996. Earnings per share for the second quarter of 1997 were computed based on 13.5 million weighted average shares, compared to 12.4 million shares in 1996. Excluding certain one-time charges totaling $30.9 million incurred during the, second quarter of 1997, net income would have been $1.0 million or $0.07 per share.
For the six months ended June 30, 1997, SDL reported revenues of $42.6 million and a net loss of $29.0 million, or $2.16 per share, compared to revenues of $42.0 million and net income of $4.6 million, or $0.38 per share for the first six months of 1996. Earnings per share for the first six months of 1997 were computed based on 13.4 million shares, compared to 12.2 million shares in 1996. Excluding the $30.9 million one-time charge in the first six months of 1997, net income would have been $1.5 million or $0.11 per share.
From 10Q:
The increase of selling, general and administrative expense (SG&A) for the three and six months ended June 30, 1997 resulted primarily from a charge of approximately $27.5 million recorded in the second quarter of 1997 for the settlement and related legal costs associated with the Spectra-Physics vs. SDL, Inc. legal dispute and, to a lesser extent,the continuing expansion of the Company's business and head-count increases. When settlement and related legal costs are excluded, SG&A as a percentage of total revenue, was 12% for the three and six months ended June 30, 1997 as compared to11% for the corresponding three and six month periods in 1996. The Company expects that SG&A, exclusive of the settlement and related legal costs for theSpectra-Physics dispute, will continue to increase to support the Company'scurrent and expected future volumes
Further discussiion of costs incurred during their product transition: sec.gov
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SDL, INC. REPORTS THIRD QUARTER RESULTS
San Jose, California, October 20, 1997 -- SDL, Inc. (NASDAQ:SDLI) today announced quarterly revenue and earnings.
For the third quarter ended September 30, 1997, SDL reported revenue of $24.0 million compared to revenue of $19.4 million in the third quarter of 1996. Third quarter 1997 net income rose 160% to $2.5 million or $0.17 per share compared to net income of $0.9 million or $0.07 per share reported for the third quarter 1996. Earnings per share for the third quarter of 1997 were computed based on 14.4 million shares, compared to 14.1 million shares in 1996.
For the nine months ended September 30, 1997, SDL reported revenue of $66.5 million and a net loss of $26.5 million, or $1.97 per share, compared to revenue of $61.4 million and net income of $5.5 million, or $0.43 per share for the first nine months of 1996. The loss in 1997 was due to a second quarter one-time charge primarily related to the settlement of a lawsuit. Shares used in the computation of per share amounts for the first nine months of 1997 were 13.4 million shares, compared to 12.9 million shares in 1996.
"We are encouraged by our return to revenue growth in the third quarter which resulted from continued strong customer demand for 980 nm pump modules generated by our new product offerings," said Donald R. Scifres, chairman and chief executive officer. "This progress is also due to our focus on increasing our front end wafer manufacturing capacity over the past 12 months".
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SDL ANNOUNCES 1997 RESULTS AND APPOINTS NEW CFO
Enhanced Manufacturing Efficiencies and Demand for New Products Add to Revenues
San Jose, California, February 3, 1998 -- SDL, Inc. (Nasdaq: SDLI) today announced quarterly and year end revenue and earnings for the period ended December 31, 1997. SDL also announced the appointment of Vincent McCord to the position of Chief Financial Officer.
For the fourth quarter ended December 31, 1997, SDL reported record revenue of $24.8 million compared to revenue of $21.1 million in the fourth quarter of 1996. Fourth quarter 1997 net income rose 15% to $1.8 million or $0.13 per share on a diluted basis compared to net income of $1.6 million or $0.11 per share on a diluted basis reported for the fourth quarter 1996. The fourth quarter 1997 results include a one-time charge for in-process R&D in connection with the acquisition of Mr. Laser, Inc. Absent this one-time charge, net income was $2.6 million and earnings per share on a diluted basis were $0.18. Diluted earnings per share for the fourth quarter of 1997 were computed based on 14.4 million shares, compared to 14.2 million shares in 1996.
For the year ended December 31, 1997, SDL reported record revenue of $91.4 million and a net loss of $24.7 million, or $1.83 per share on a diluted basis, compared to revenue of $82.5 million and net income of $7.1 million, or $0.54 per share on a diluted basis for 1996. The loss in 1997 was due to a second quarter one-time charge primarily related to the settlement of a lawsuit. Shares used in the computation of diluted per share amounts for 1997 were 13.5 million shares, compared to 13.2 million shares in 1996.
Commenting on the quarter, Donald R. Scifres, chairman and chief executive officer, said, "The solid results reflect the successful implementation of our new front end wafer manufacturing line as well as the increasing demand for products based on our 980 nm pump module technology. During the quarter, we experienced substantial yield improvements, especially late in the quarter, in many of our product lines, with yields on one key line several times higher than on the old manufacturing line. This substantial yield improvement should add more production capacity than we originally anticipated, as well as lowering manufacturing costs for these product lines."
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[Notice what happens as manufacturing ramps on new lines:]
SDL ANNOUNCES FIRST QUARTER RESULTS
San Jose, California, April 27, 1998 -- SDL, Inc. (Nasdaq: SDLI) today announced quarterly revenue and earnings for the quarter ended March 31, 1998.
For the first quarter ended March 31, 1998, SDL reported record revenues of $25.4 million compared to revenues of $21.0 million in the first quarter of 1997 and $24.8 million in the fourth quarter of 1997. This represents a 21% increase in revenues over first quarter 1997 and a 2% increase over fourth quarter of 1997. First quarter 1998 net income was a record $2.7 million or $0.19 per share on a diluted basis which represents a 432% increase compared to a net income of $0.5 million or $0.04 per share on a diluted basis for the first quarter of 1997 and a 47% increase over net income of $1.8 million or $0.13 per share on a diluted basis for the fourth quarter of 1997. Net income for the fourth quarter included a one-time charge of $753,000 related to an acquisition. Diluted earnings per share for the first quarter of 1998 were computed on 14.5 million shares, compared to 14.3 million shares for the first quarter of 1997 and 14.4 million shares in the fourth quarter of 1997.
Commenting on the quarter's operating results, Donald R. Scifres, SDL's chairman and chief executive officer said, "We are quite pleased with our financial results, our manufacturing progress and especially the growth in our fiber optic telecommunications product revenues. A particular highlight was the introduction of a large number of advanced new products which we believe represent the most significant product introductions for SDL over the past several years. We anticipate these products will positively impact our revenues in the second half of 1998."
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SDL ANNOUNCES RECORD RESULTS FOR SECOND QUARTER 1998
San Jose, California, July 27, 1998 -- SDL, Inc. (Nasdaq: SDLI) today announced quarterly revenue and earnings for the quarter ended June 30, 1998.
For the second quarter ended June 30, 1998, SDL reported record revenues of $25.8 million compared to revenues of $21.6 million in the second quarter of 1997. This represents a 20 percent increase in revenues over second quarter 1997. Second quarter 1998 net income was a record $2.9 million or $0.20 per share on a diluted basis compared to a net loss of $29.5 million or $2.19 per share on a diluted basis for the second quarter of 1997. Diluted earnings per share for the second quarter of 1998 were computed based on 14.7 million shares, compared to 13.5 million shares for the second quarter of 1997.
For the six months ended June 30, 1998, SDL reported revenues of $51.2 million and a net income of $5.6 million, or $0.38 per share on a diluted basis, compared to revenues of $42.6 million and net loss of $29.0 million, or $2.16 per share on a diluted basis for the first six months of 1997. Diluted earnings per share for the first six months of 1998 were computed based on 14.6 million shares, compared to 13.4 million shares for the first six months of 1997.
Commenting on the quarter, Donald Scifres, chairman and chief executive officer said, "Our second quarter growth represents the successful transition to and initial yield improvements gained from last year's investments in our new wafer fab facility and our manufacturing upgrades. The new facilities and manufacturing upgrades were intended to lower costs and substantially increase our chip capacity to meet customer demand. It has done both. In the first half of 1998, for example, we averaged chip yields in our 980 nm laser product line of more than three times the old line, and our new capacity is over 100,000 chips per year for this product."
Scifres continued, "We are particularly pleased with our performance in our communications markets where revenues increased by about 20 percent compared to the first quarter of 1998. Key contributors to this growth were the strong demand for 980 nm pump modules used in fiber optic communications and increased satellite communications shipments.
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[Notice in the following quarter their earnings were hurt by old business even though new business was growing at an astounding rate:]
SDL ANNOUNCES RECORD THIRD QUARTER NET INCOME
San Jose, California, October 16, 1998 -- SDL, Inc. (Nasdaq: SDLI) today announced quarterly revenue and earnings for the quarter ended September 30, 1998.
For the third quarter ended September 30, 1998, SDL reported revenues of $25.6 million compared to revenues of $24 million in the third quarter of 1997. Third quarter 1998 net income was a record $3.1 million or $0.21 per share on a diluted basis. This was an increase of 26 percent compared to a net income of $2.5 million or $0.17 per share on a diluted basis for the third quarter of 1997. Diluted earnings per share for the third quarter of 1998 were computed based on 14.7 million shares, compared to 14.4 million shares for the third quarter of 1997.
For the third quarter, the company's gross margins reached 36.1 percent. This compares to gross margins of 31.8 percent for the same quarter in 1997 and 34.5 percent for the second quarter of 1998.
For the nine months ended September 30, 1998, SDL reported record revenues of $76.7 million up 15 percent, compared to revenues of $66.5 million for the first nine months of 1997. Net income for the same period was a record $8.7 million or $0.59 per share on a diluted basis, compared to a net loss of $26.5 million, or $1.97 per share in the first nine months of 1997. Diluted earnings per share for the first nine months of 1998 were computed based on 14.6 million shares, compared to 13.4 million shares for the first nine months of 1997.
Third quarter revenue was down one percent sequentially from the record $25.8 million recorded in the second quarter of 1998 as strong growth in revenue from dense wavelength division multiplexing (DWDM) products was offset by a reduction in U.S. government revenue. Net income increased by seven percent over net income for the second quarter of 1998 due to higher gross margins.
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[Manufacturing continues to ramp, resulting in a record quarter. However, anyone who bailed due to disappointment in the prior quarter's decline missed what would become a 1000% increase in less than a year:]
SDL ANNOUNCES RECORD REVENUE AND EARNINGS
San Jose, California, February 3, 1999 -- SDL, Inc. (Nasdaq: SDLI) today announced record revenues and earnings for the fourth quarter and year ended December 31, 1998.
For the fourth quarter ended December 31, 1998, SDL reported record revenues of $29.4 million compared to $24.8 million in the fourth quarter 1997. Fourth quarter 1998 net income more than doubled, rising 125 percent to $4.1 million, or $0.28 per share on a diluted basis, compared to net income of $1.8 million, or $0.13 per share on a diluted basis, reported for the fourth quarter 1997. Diluted earnings per share were computed on 14.9 million shares compared to 14.4 million shares in 1997.
For the year ended December 31, 1998, SDL reported record revenue of $106.1 million and net income of $12.8 million, or $0.87 per share on a diluted basis, compared to revenues of $91.4 million and a net loss of $24.7 million, or $1.83 per share on a diluted basis, for 1997. Shares used in the computation of diluted per share amounts for 1998 were 14.7 million shares compared to 13.5 million shares in 1997.
Commenting on the quarter, Donald R. Scifres, chairman and chief executive officer, said, "We are very pleased by the growth of our communications product lines. Driven by demand in the long haul terrestrial sector, our communications products represented 66 percent of our total fourth quarter revenue versus 47 percent in the same quarter last year. The demand for our flagship 980 nm pump modules has grown over 100 percent over the past 12 months, attributable largely to the start of installation of dense wavelength division multiplexed (DWDM) fiber optic networks that provide increased throughput for the growing data, voice and Internet traffic. We also initiated production on the first undersea fiber optic supply contract during the quarter. We expect to continue to increase production levels on this contract in early 1999."
"Our increased focus on higher margin communications products, plus steady improvements in our manufacturing efficiencies, helped to boost gross margins to 38.7 percent in the quarter as compared to 36.1 percent and 34.5 percent in the previous two quarters respectively," Scifres continued. "In fiscal 1999, we will remain dedicated to sustaining strong margins, in part, by expanding our DWDM product line, upgrading manufacturing capabilities, and strengthening our customer relationships."
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Growth in new products continues:
SDL ANNOUNCES RECORD REVENUE FOR 1999 FIRST QUARTER
Operating Income Increases 135 Percent Excluding Acquisition Charges
San Jose, California, April 27, 1999 -- SDL, Inc. (Nasdaq: SDLI) today announced record revenues and income before acquisition-related charges for the first quarter ended March 31, 1999. Record revenues of $35.7 million were up 41 percent from the $25.4 million reported in the first quarter of 1998.
SDL reported net income for first quarter 1999 of $3.0 million or $0.19 per share on a diluted basis. As announced on February 10, the quarter's costs include $2.2 million of charges, or $0.14 per share, related to the acquisition of Polaroid's fiber laser business completed in February 1999.
Excluding acquisition-related charges, and as illustrated in the table below, SDL earned record operating profit of $6.2 million, representing a 135 percent increase from the same period in 1998. Net income, on a pro-forma basis, was a record $5.1 million, or $0.33 per diluted share, up 87 percent from $2.7 million, or $0.19 per diluted share, in the first quarter of 1998. The first quarter diluted earnings per share were computed on 15.5 million shares, compared to 14.5 million shares in 1998.
Commenting on the quarter's performance, SDL's Chairman and Chief Executive Officer Donald R. Scifres said, "Our first quarter results indicate the continued strength in our commercial communications product lines. Revenue from sale of fiber optic products for dense wavelength division multiplexing systems tripled, rising 204 percent from the prior year quarter and up 41 percent sequentially. Overall communications revenues grew by 117 percent from the year earlier quarter and were up 32 percent versus the fourth quarter of 1998. Seventy-two percent of our total revenue came from communications applications in the quarter."
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SDL ANNOUNCES RECORD RESULTS FOR 1999 SECOND QUARTER
Operating Income Rises 27 percent over Q1, Excluding Acquistion Charges
San Jose, California, July 27, 1999 -- SDL, Inc. (Nasdaq: SDLI) today announced record revenues and income before one-time merger expenses for the second quarter ended June 30, 1999. Second quarter revenue was a record $43.2 million, including $2.5 million from IOC International plc, acquired in May 1999 in a transaction accounted for as a pooling-of-interest. This is a 52 percent increase compared to $28.4 million for the corresponding 1998 quarter. Excluding IOC from both 1999 and 1998 results, second quarter 1999 revenue increased 58 percent versus the second quarter of 1998. Sequentially, total revenue increased 15 percent from the combined $37.7 million reported for the March 1999 quarter.
Including merger expenses, SDL reported net income for the second quarter 1999 of $3.2 million or $0.10 per share on a diluted basis. The quarter's costs include $2.7 million of non-tax deductible merger expenses, or $0.08 per share, related to completing the IOC acquisition.
Before merger expenses, and as illustrated in the table below, operating income was a record $7.3 million for the quarter and was 16.8 percent of revenue. Excluding IOC, operating income was a record $7.7 million. Consolidated operating income increased by 27 percent over the March 1999 quarter and by 522 percent over the prior year quarter. Excluding IOC, the operating margin increased to 18.9 percent versus 17.4 percent in the first quarter and 11.0 percent in the second quarter of 1998. Net income, excluding merger expenses, was a record $5.9 million, or $0.18 per diluted share, up 380 percent from $1.2 million, or $0.04 per diluted share, in the second quarter of 1998. The second quarter diluted earnings per share were computed based on 33.0 million shares, compared to 30.3 million shares in 1998.
For the six months ended June 30, 1999, SDL reported record revenue of $80.8 million, up 46 percent compared to revenues of $55.3 million in the first six months of 1998. Excluding acquisition-related charges, net income for the same period was a record $10.6 million or $0.32 per diluted share, compared to net income of $2.6 million or $0.09 per diluted share in the first half of 1998. Diluted earnings per share for the first six months of 1999 were computed based on 32.6 million shares, compared to 30.1 million shares for the first six months of 1998.
Commenting on the quarter's performance, SDL's Chairman and Chief Executive Officer, Donald R. Scifres, said, ``We are very pleased with our revenue and profit growth in the second quarter. This growth was driven primarily by our fiber communications product lines that serve the long haul terrestrial, undersea and CATV markets. Demand for these products was up 174 percent over the year earlier quarter. This growth was clearly a highlight for the quarter.'
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Incidentally, SDLI reports on Tuesday after the close. I don't know if there are any whisper numbers, but I do know they moved into their Victoria, B.C., facility earlier than anticipated. I also know they're expecting next quarter's numbers to be far stronger the quarter now reporting.
It would be interesting to compare research coverage but I don't have SDL's history and would have to call the company to trace it. I would guess less than half of the current analysts followed them a year ago. And not so incidentally, they changed CFOs twice during the past 2 1/2 years.
Okay, time to sign off. Daughter Number One's birthday is today and the kids are all here. . .
Cheers!
Pat
P.S. For full disclosure, I hold stock in both companies. |
