Having fallen 75% in the past four months, shares in fibre-laser maker SPI could be regarded as a bargain – especially as chief executive David Parker is confident the break-even point is just around the corner.

Not ten months after it scooped up £10m at 200p, SPI has completed a £10.5m fundraising at just 30p (against the previous day’s price of 85p) to bolster its frail balance sheet. As well as offering assurance to larger partners that SPI is liquid, this should provide sufficient cash for it to break even by the end of 2008 as predicted.

The Southampton-based company has been assailed by various tribulations over recent months, including supplier delays, a delay in the ‘phasing’ of a large contract with the Ministry of Defence, a weak dollar and industry price pressure.

Sales of £7.2m for the six months to June are equal to the whole of the previous year, and an increase in customer accounts of 36% indicates SPI is gaining a foothold in the market. However, losses deteriorated 15% to £5.3m and the above issues will mean the second half will be held back.

With cash in its coffers, the business has emerged from this period scarred but extant, and Parker reckons lower industry prices should even be a good thing in the long run, opening up the market. ‘Margins will be affected though, so we have put a lot more effort into cost reduction and strong supplier alliances,’ he says.

That breakeven will be reached is obviously a moot point, but those confident it will happen include shareholders AXA Framlington, Advent, Artemis, Gartmore and Herald. Uncertainty abounds, though, so we say avoid.

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