Fourth Quarter Net Income Increases 15% Year Over Year and 118% for the Full Year

December 31,

December 31,

2011

2010

% Change

2011

2010

% Change

Management Comments

?We again report strong growth for the fourth quarter and for the full year,? said Dr. Valentin Gapontsev, IPG Photonics? Chief Executive Officer. ?Revenues for the year increased 59% and net income more than doubled. Our fourth-quarter results were consistent with the trend that carried through 2011 ? strong year-over-year revenue growth driven by high-power laser sales for materials processing applications.?

?In the fourth quarter of 2011, revenues increased 22% compared with a strong fourth quarter of 2010,? said Dr. Gapontsev. ?We also grew earnings to $0.64 per diluted share from $0.56 per diluted share a year ago. For the full year, earnings rose to $2.41 per diluted share in 2011 from $1.13 per diluted share, and gross margins stepped up to 54.2% in 2011 from 48.9% a year ago.?

?We saw continued robust sales in materials processing, which accounted for 90% of total sales and rose 32% year-over-year,? said Dr. Gapontsev. ?High power lasers, our largest product line, grew 62% year over year in the fourth quarter, driven primarily by demand for cutting and welding applications in Europe and North America from OEMs, as well as multiple applications in the automotive industry. Overall, our total sales growth was impacted by lower year-over-year sales in non-materials applications which account for much smaller portions of total sales. IPG finished the year with a book-to-bill ratio in excess of 1.0.?

?At year end, IPG had $205.7 million in cash and short-term investments on the balance sheet, an increase of $9.1 million from the previous quarter,? said Dr. Gapontsev. ?In 2011, IPG generated $87.9 million in cash from operations. We spent approximately $54 million on capital expenditures, primarily to support manufacturing and technology improvements, as well as capacity for the assembly of finished product.?

Business Outlook and Financial Guidance

?The past year has proven that significant opportunities exist for IPG?s fiber lasers, even in the face of slow economic growth and global uncertainties,? said Dr. Gapontsev. ?Several factors are driving the increasing acceptance of our technology and we are well positioned to capitalize on this trend. Going forward, we will focus on managing growth, expanding our product and application scope and building capacity to meet increasing demand. With the leverage in our business model, we believe we can translate that demand into sustained profitability.?

?We typically experience some seasonality in our first quarter. So while we expect first-quarter sales to grow year over year, the low- to mid-range of our guidance reflects a potential sequential decline from the fourth quarter from seasonal factors,? said Dr. Gapontsev. ?Going forward, we are mindful of the economic environments in Europe and China, although we believe the long-term prospects in both geographies are promising for IPG.?

IPG Photonics expects revenue in the range of $115 million to $125 million for the first quarter of 2012. The Company anticipates earnings per diluted share in the range of $0.54 to $0.64 based on 48,685,000 diluted common shares, which includes 47,564,000 basic common shares outstanding and 1,121,000 potentially dilutive options at December 31, 2011.

As discussed in more detail below, actual results may differ from this guidance due to various factors including, but not limited to, product demand, competition and general economic conditions. This guidance is subject to the risks outlined in the Company?s reports with the SEC, and assumes that exchange rates remain at present levels.

Conference Call Reminder

The Company will hold a conference call to review its financial results and business highlights today, February 10, 2012 at 10:00 a.m. ET. The conference call will be webcast live and can be accessed on the ?Investors? section of the Company?s website at www.ipgphotonics.com. The conference call also can be accessed by dialing (877) 709-8155 or (201) 689-8881. Interested parties that are unable to listen to the live call may access an archived version of the webcast, which will be available for approximately one year on IPG?s website.

About IPG Photonics Corporation

IPG Photonics Corporation is the world leader in high-power fiber lasers and amplifiers. Founded in 1990, IPG pioneered the development and commercialization of optical fiber-based lasers for use in a wide range of applications such as materials processing, advanced, telecommunications and medical. Fiber lasers have revolutionized the industry by delivering superior performance, reliability and usability at a lower total cost of ownership compared with conventional lasers, allowing end users to increase productivity and decrease operating costs. IPG has its headquarters in Oxford, Massachusetts, and has additional plants and offices throughout the world. For more information, please visit www.ipgphotonics.com.

Safe Harbor Statement

Information and statements provided by the Company and its employees, including statements in this press release, that relate to future plans, events or performance are forward-looking statements. These statements involve risks and uncertainties. Any statements in this press release that are not statements of historical fact are forward-looking statements, including, but not limited to, significant opportunities for IPG, growing acceptance of our technology and our ability to capitalize on this trend, our focus on managing growth, expanding our product and application scope, building capacity to meet increasing demand, translating increasing demand to sustained profitability, and revenue and earnings per share expectations for the first quarter of 2012. Factors that could cause actual results to differ materially include risks and uncertainties, including risks associated with the strength or weakness of the business conditions in industries and geographic markets that the Company serves, particularly the effect of economic downturns; reduction in customer capital expenditures; potential order cancellations and push-outs and financial and credit market issues; the Company?s ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG?s products; effective management of growth; level of fixed costs from its vertical integration; intellectual property infringement claims and litigation; interruption in supply of key components, including from transportation disruptions from natural and man-made events; manufacturing risks; inventory write-downs; foreign currency fluctuations; competitive factors, including declining average selling prices; building and expanding field service and support operations; uncertainties pertaining to customer orders; demand for products and services; development of markets for the Company's products and services; and other risks identified in the Company's SEC filings. Readers are encouraged to refer to the risk factors described in the Company's Annual Report on Form 10-K (filed with the SEC on March 15, 2011) and its periodic reports filed with the SEC, as applicable. Actual results, events and performance may differ materially. Readers are cautioned not to rely on the forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update the forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

REDEEMABLE NONCONTROLLING INTERESTS

COMMITMENTS AND CONTINGENCIES

Common stock, $0.0001 par value, 175,000,000 shares authorized;47,616,115 and 46,988,566 shares issued and outstanding at December 31,2011 and 2010, respectively

Exercise of employee stock options, issuances under employee stock purchase planand related tax benefit from exercise