Contact: Scott Denne
Veeco Instruments is making a huge bet at an unusual time. The company is paying $70m in cash for atomic laser deposition systems provider Synos Technology, with earnouts potentially raising the total cost of the acquisition to $185m. Meanwhile, Veeco is undergoing an internal accounting review and hasn’t filed financial results in nearly a year.
Instead of acquiring an unproven company, Veeco should have bought itself an abacus. The company hasn’t filed financial results since the third quarter of 2012 as it reviews whether it recognized revenue on its metal organic chemical vapor deposition devices in the appropriate periods. The review could result in a shift in revenue to different periods. When it did report, it wasn’t pretty. Trailing revenue at the time fell 45% from the prior year, to $595m.
However, if Veeco can successfully integrate Synos and the target can meet its earnout milestones, the rewards would be substantial. Synos, which sells equipment that enables the manufacturing of flexible displays on cell phones, just began shipping its first product earlier this year. Nonetheless, Veeco anticipates that it will ship $80m in product next year, followed by $200m in 2015.
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