StockerYale posts loss, eyes possible acquisition


StockerYale, fresh off the sale of its North American operations, posted a net loss of nearly $1.5 million (3 cents a share) in the quarter proceeding the sale, according to the company’s third-quarter filing with the Securities and Exchange Commission.The entire loss stemmed from the company’s remaining operations in England and Ireland.Still the Salem, N.H.-based optics company – with some $6.3 million in cash in its pocket from the $15 million sale on Oct. 13 (though still saddled with $8.4 million in debt) – plans on going on a shopping spree, hoping to snag a large distressed industrial company.There are many “unique opportunities at very compelling prices,” said chief executive Mark Blodgett in response to a question about his strategic acquisition strategy during an earnings conference call on Nov. 19.Such a purchase might be financed out of cash, or by borrowing more money, Blodgett said. Blodgett said he might be interested in acquiring a company outside the optical field, though he would stick to an industrial company and avoid a retail or real estate venture. And though he promised to be “very conservative on any external growth opportunities,” he added that “my inclination is to do something larger rather than smaller as long as it is digestible … You have to be a bigger company today than four or five years ago.”Before the sale, StockerYale was becoming an increasingly smaller company.The company was down to $1.2 million in cash at the end of the quarter (which closed Sept. 30) and it was so much in debt that stockholders owed more than they held in assets. The company posted a negative equity of $731,000, compared to $2.379 million in positive equity at the beginning of the year.Year-to-date, the company lost $3.7 million, or 9 cents a diluted share.StockerYale’s loss would not have been as great – $500,000 for the quarter and less than $750,000 year-to-date – had it not been for the cost of borrowing and other factors, such as executive equity compensation. The company paid $650,000 in interest and financing costs last quarter alone.Sale of the company’s Salem and Montreal laser operations to the California-based Coherent Inc. for $15 million cash and Coherent’s assumption of $3.4 million in liabilities enabled StockerYale to retire $7.9 million in debt. That left StockerYale with $6.3 million in cash after transaction expenses, though $750,000 is being held in escrow in case there is some dispute as to whether Coherent was not fully informed about the assets it was buying.In the deal, StockerYale sold off the sections of the company that had done relatively well. The laser business basically broke even last quarter, even netting a slight gain of $26,000.StockerYale’s net loss was due to the business it still has -- LED and photonic products. Revenues were down 37 percent, partly due to a sharp decline in LED sales, which fell from $1.39 million to $795,000, a drop of 43 percent.However, Blodgett said the company is seeing signs of a rebound in LED sales for next year, and the company has developed plans to expand sales into medical, homeland security, solar panel and the line-scan inspection markets. In addition the sale itself will result in a net gain in the fourth quarter, the company said.StockerYale shares sold at 9 cents, down 1.5 cents, at the market’s close on Monday. – BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW
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