GaAs Valley

Kopin Corp.

Kopin Corp.<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KOPN)") else Response.Write("(Nasdaq: KOPN)") end if %> is engaged in the development, manufacture, and sale of flat panel display devices and products and custom "wafer-engineered" gallium arsenide materials. Wafer-engineering is the process of splicing or layering selected dissimilar materials, combining the desired properties of each, to provide optimal performance for specific applications. This technology is currently being used in the development of a new class of miniature high-resolution flat panel display imaging devices for portable communications applications (such as screens mounted on the side of a cellular phone). Flat panel displays are said to represent a $10 billion market worldwide, and is estimated to increase to over $20 billion by the year 2000 (dwarfing the GaAs market by itself).

Kopin is extremely difficult to value on short-term earnings, and has a negative trailing EPS of ($0.81). Kopin's latest product, "Cyberdisplay," engaged its first OEM partner, Siemens AG, which has agreed to supply Cyberdisplays in a multimillion-dollar agreement. If the company manages to ship its first million units of Cyberdisplay, it may be profitable in 1998. However, Kopin expects to use approximately $1.5 million in the remainder of 1997, $3 million in 1998, and $3 million in 1999 for capital equipment and expansion of the company's manufacturing capabilities. The company also expects to incur significant R&D expenditures in the course of developing its technology.

With Kopin currently trading at 7x book value and 14x sales, much of the future potential has already been generously discounted in the stock. However, if the company continues to ink agreements with prominent companies like Motorola, with which it recently signed a a multi-year, multi-million dollar business alliance whereby the companies will develop, manufacture, and market low-cost, low-power portable communications flat panel display products, profitability may come sooner than expected.

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