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Phil,
Thanks for the heads up.
For our Archive...
Ian.
+++++++++++++++++++++
For Mattson, Truly Worst, Best Of Times
Date: 6/16/99
Author: James DeTar
Mattson Technology Inc. is at a critical juncture.
The maker of products used to manufacture chips is coming off its worst
year ever. The Fremont, Calif., company lost $22.4 million, or $1.52 a
share, on sales of $59 million. It blamed Asia's troubles and the fact that
most chip-making facilities last year had plenty of capacity and didn't need
to expand. The company made 9 cents a share on sales of $77 million in
1997.
Founder and Chief Executive Brad Mattson also founded Novellus
Systems Inc., one of the largest chip-gear makers. He left Novellus to start
Mattson Technology 11 years ago. Mattson makes ''strip'' machines that
remove excess material during the making of chips.
Mattson candidly says he'll consider all offers for his company. But he says
staying in the fight is his first preference. The company plans new products
and, Mattson says, is recovering.
He spoke with Investor's Business Daily about his turnaround plans.
IBD:
How will you return Mattson to profitability?
Mattson:
It's all just based on (growing) revenues. 1998 was the worst year in the
industry in 25 years. We also need to reach a certain critical size to be
successful and grow.
It's an interesting puzzle to determine exactly the right ize to maintain a
company) in a downturn and still have the capability to grow. We went
from having three weeks of factory shutdown in Q4 '98 to working
overtime in Q1 '99. In fact, in Q2 we cannot meet demands for our
products.
IBD:
What's the minimum size Mattson needs to succeed?
Mattson:
Somewhere between $200 million and $500 million in sales. When you
look at the top 10 companies in this industry, I think the 10th company is in
the $300 million or $400 million range.
IBD:
Do you plan layoffs?
Mattson:
No, we're looking at hiring people. We're in a growth phase now. We
cannot even meet our delivery commitment for Q2. If we were able to
meet all of our demand, it would be our biggest quarter in history. That's
hard to believe - coming off the worst quarter in our history three quarters
ago.
IBD:
When do you think you'll return to profitability?
Mattson:
Later this year. The second quarter is questionable, only because we can't
ship enough. We had to cut back for the downturn in '98, and therefore we
can't respond as quickly as our customers might have liked. So we might
not hit profitability in this quarter.
We agree with most industry analysts' assessments that Q4 will come back
strong.
IBD:
Would you welcome a suitor?
Mattson:
We're open to discussion all the time on that. This industry is in
consolidation. We view ourselves as a consolidator, rather than a
''consolidatee.'' But we're open to all of those discussions.
We have typically been (making) up to two acquisitions a year. We've
been looking at (possible acquisitions) in great detail. We bought a
company last year. And we're constantly looking.
IBD:
That sounds like a lot of acquisitions for a small company.
Mattson:
What we've done, even though we're relatively small, is put a global
infrastructure in place. We have direct sales offices in Singapore, Korea,
Japan, Taiwan and Europe. So we don't need necessarily to tie up with a
large company to get their infrastructure. We have it.
IBD:
Will the chip-gear industry keep growing?
Mattson:
Yes. It's almost a shame what we've gone through (last year), because the
fundamentals were there in 1997. And we had a record growth quarter in
'97, right when the Korean economy collapsed. And we didn't see it. A lot
of people were surprised by it. All of Southeast Asia collapsed. And that
really prolonged the slowdown.
IBD:
Do you think the Asian economic crisis is over?
Mattson:
They're looking better. The fundamentals in Japan are still problematic.
Korea will still be suffering for a while. It's going to take years. I think their
economies are in reasonable shape; reasonable, but not great. |
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