Rubicon Technology

RBCN : NASDAQ : US$7.49
HOLD 
Target: $8.00

COMPANY DESCRIPTION:
Based outside of Chicago, IL, Rubicon Technology is a
materials company specializing in growing
monocrystalline sapphire products mainly for the LED
and RFIC markets. It supplies 2″, 3″, 4″ and 6″ sapphire
cores and wafers as well as sapphire optical products for
the aerospace and defense market.
All amounts in US$ unless otherwise noted.

Sustainability — Energy & Power Technologies
A FALLING SHARD OF SAPPHIRE?
DOWNGRADING TO HOLD ON ASSET 
VALUATION
Investment recommendation
We believe RBCN has lost share in the sapphire market and its
move to vertically integrate has caused greater than expected
costs and delays in adoption. Despite the negatives, the shares
are trading well below tangible book value and, as such, we are
downgrading to HOLD on the asset valuation.
Investment highlights
 We believe RBCN’s move to vertically integrate has materially
increased its cost structure and is taking longer than
expected to qualify new customers.
 We believe that RBCN’s decision to raise pricing in the
Second Cycle has impaired its relationships with LED
manufacturers and is taking a toll as it bypasses the polishing
houses with its polished and patterned products.
 Our estimates have been materially lowered yet we maintain
a HOLD rating on the company as the shares are trading well
below tangible book value with a solid balance sheet,
minimal cash burn, and NOLs above the share price.

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