Vicor Corporation Provides Update Regarding Current and Near-Term Performance
Vicor Corporation currently expects to report fourth quarter fully diluted earnings at an essentially break-even level (i.e., either a small net income or net loss). Based on existing backlog, the Company expects to report a net loss for the first quarter of 2013.
Addressing current performance trends, Dr. Patrizio Vinciarelli, Vicor's Chairman of the Board and Chief Executive Officer, stated, "As of the third quarter of 2012, the Company has experienced eight consecutive quarters of declining earnings per share, largely attributable to: (i) reduced demand across important market segments traditionally served by the Company's business units; (ii) delays in development and sale of innovative new products targeting high volume original equipment manufacturers ('OEMs') of high performance computing and networking systems caused, in part, by allegations of infringement without merit; and (iii) increased operating expenses associated with IP litigation and an expanded sales and marketing infrastructure.
"Among our traditional market segments, the defense electronics segment has experienced a sustained decline in revenue due to federal budget constraints. Similarly, our revenues from supercomputing platforms are substantially reduced because of slowing demand and low cost competition. Demand in our commercial market segments, notably industrial equipment and transportation, has been characterized recently by greater uncertainty, as businesses, with limited visibility into their own prospects, reduce their spending and investment. This has been experienced across our European customer base, given that region's decline into recession, and increasingly across our North American customer base, as customers defer business decisions until the political stalemate associated with the pending federal budget 'sequestration' is addressed."
Dr. Vinciarelli continued, "In the fourth quarter of 2012, our bookings activity (i.e., the receipt of new orders for shipments scheduled within one year) has slowed; through November 23, 2012, bookings for the fourth quarter were approximately one third lower than their level at the corresponding time in the third quarter of 2012. This reduction in orders has caused us to reassess our expectations for revenue and earnings for the fourth quarter of 2012 and the first quarter of 2013. Orders in our traditional markets of defense electronics, industrial equipment, and transportation have slowed to a level necessitating a furlough of manufacturing personnel within our Brick Business Unit. Large volume VI Chip orders from new OEM customers have also been delayed, leading to a furlough of manufacturing personnel within our VI Chip subsidiary. Both furloughs will take place starting in December."
Concluding his remarks, Dr. Vinciarelli stated, "While we have not experienced substantial order cancellations, our visibility into customer near term demand is limited. Accordingly, the Board of Directors believes the Company's financial performance may not improve until after new products in which the Company has made a considerable investment begin to contribute to our revenue and earnings. However, anticipating much more favorable performance and cost attributes for our new products, we remain committed to our strategy and believe investors will be rewarded over the long-term."
On November 19, 2012, the Company announced its intent to commence a tender offer to repurchase shares of its Common Stock valued up to $20 million. The tender offer will be made solely by the Offer to Purchase and the related Letter of Transmittal. Shareholders and investors are urged to read the Company's tender offer statement on Schedule TO to be filed with the U.S. Securities and Exchange Commission (SEC) in connection with the tender offer, which will include exhibits, the Offer to Purchase and the related Letter of Transmittal, when available, because they will contain important information. Each of these documents will be filed with the SEC, and investors will be able to obtain them without charge from the SEC at its website.
