Including a $5.4 million one-time charge and the impact of the company’s portion of the Scion Photonics results, the company reported net income and diluted earnings per share of $6.1 million and $0.05, respectively. Cash on the balance sheet increased by $15.5 million to $114.2 million while the company paid off $5 million in debt and Scion Photonics continued to invest in its optical business.
The one-time charge was primarily for the obsolescence of equipment, and the consolidation of its slider fabrication, head gimbal assembly (HGA), and head stack assembly (HSA) prototype and development activities to its operations in Thailand. The company expects that this consolidation will further improve the company’s HGA and HSA manufacturing efficiencies and the company does not expect any further charges for these items.
The company grew revenue to $193.3 million from $190.0 million for the previous quarter. Pro forma net income for the second quarter decreased slightly as the company experienced lower yields and higher manufacturing costs in the month of March. The increased costs were incurred during the ramp of the 30GB programs and additional spending on 40GB technology. Read-Rite shipped 23 million heads and 3.2 million HSAs during the quarter, compared to 23 million heads and 3.5 million HSAs for the previous quarter. Even though recording head shipments were flat quarter-to-quarter, Read-Rite believes it increased its market share during the quarter.
We are proud of our accomplishments over the last several months in generating profits through the development, manufacturing and delivery of the best performing 20GB magnetic recording heads in the industry. Indeed, to realize quarter-to-quarter sequential revenue growth, maintain profitability and generate cash in the current environment of earnings and revenue shortfalls is no small accomplishment. Our long-term success continues to depend on providing time-to-market, high quality technology to our customers. With this in mind, the company’s immediate focus is the continued ramp of our 30GB per platter programs at increasing yields and completing the design of our 40GB per platter programs for volume manufacturing, stated Alan S. Lowe, president and chief executive officer.
Scion Photonics reported a loss of $6.6 million on revenues of $0.2 million in the second fiscal quarter. Entering the June quarter, Scion had a $2.7 million backlog primarily for process automation equipment. During the second quarter, Scion shipped its first 100GHz filters, introduced its prototype 40-channel, 100 GHz array waveguide gratings (AWG’s), designed custom planar lightwave circuit (PLC) components, and delivered on several small contract development orders which Scion is hopeful will lead to larger volume orders in the future. Finally, Scion is in the process of closing its second round of financing and to date has over 50% of the funds committed from its current investors, of which Read-Rite is one.
SOURCE: COMPANY PRESS RELEASE
