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9-11-2006 CYBE - CyberOptics Corp

CURRENT PRICE: $12.88

TYPE OF PLAY: EARNINGS GROWTH /SHARE BUYBACK/VALUE/TECHNICAL ANALYSIS

CyberOptics is a world leader in intelligent sensing solutions for the electronics assembly and semiconductor equipment markets. Hundreds of manufacturing plants around the globe use CyberOptics sensors and systems to measure and eliminate defects.

In the most recently reported quarter, consolidated sales totaled $14,551,000, an increase of 73% from $8,429,000 in the year earlier period. Net income came to $1,907,000 or $0.21 per diluted share, up significantly from $202,000 or $0.02 per diluted share in the year-earlier period and up 31% from $1,456,000 or $0.16 per diluted share in this year's first quarter. The company also gave guidance in the .16-.19 range for the third quarter. Even the low end of this is over 100% more than the .06 reported in the same quarter of the previous third quarter. Their already robust margins increased 5% to 56% last quarter. The balance sheet is notably strong. At the end of the last quarter they had over 48 million in cash (~$5.33 per share) and 0 debts. Consider that they are pulling off this higher growth and earnings per share despite the fact that they are expensing options and now paying the 34% fully taxed rate, whereas last year they were only in the 26% tax rate.

Discussing the latest quarter, Kathleen P. Iverson, president and chief executive officer, commented: "Our strong sales and above-plan earnings were driven by robust demand for our electronic assembly sensors and the new Flex Ultra automated optical inspection (AOI) system. " In the conference call the company also discusses more future products in the wafer sense product line, and a "teaching sensor".

We like the fact that the company is very proactive in promoting their products. They were in Shenzhen, China, from August 29 through September 1, 2006 for NEPCON showing off their new products, and they will exhibit Process Insight statistical process control (SPC) software in booth 5939 at the upcoming Assembly Technology Expo (ATExpo), scheduled to take place September 26-28, at the Donald E. Stephens Convention Center in Rosemont (Chicago), IL.

The company is not only talking about good things in the future, they are putting their cash behind it. They announced that its board of directors has approved the repurchase of up to 500,000 shares of its common stock in the open market for a one year period commencing July 31, 2006.

We think that the large (and growing) cash position, strong year over year growth, new, fresh product lines, and positive outlook make this a very attractive company going forward. The lower quarter of .06 in last years Q3 makes it a relatively easy number to beat if all goes as the company has guided. The chart has based for almost four months and has established what appears to be a strong base to springboard off of.

LINKS FOR FURTHER READING:
CYBE Homepage
Last Earnings Release
SEC filings for CYBE
General CYBE statistics
China NEPCON (Aug 29 - Sept 1, 2006)
Assembly Technology Expo Sept 26-28,2006