Well...having listened to CC....I guess I will make fertilizer out of this "crappy" quarter. Unlike some people on this thread, I was NOT expecting a boom Q. I am not expecting anything until summer of '00.....this is obvious from the analyst following CFM who expect a loss of 0.45 next fiscal year. As the market is 6 months ahead of the cycle, if you believe the front end recovery to hit full speed mid-00, then I suspect that buying season begin now.
My spin on this Q and the CC and why I stand "alone" in this fertilizer. :~)
1) Generally, Asia is coming back, Taiwan particularly. As 56% of revenue is coming out of this region, I see their future growth reflecting this rebound.
2) Margins this year were 36% compared with 2% disaster of '98. Pricing pressure has lightened to some degree which will enable them to push these up over the coming months.
3) Backlog up $9.1M (?) and as of October 31, 1999, the Company's cash, cash equivalents and short-term investments totaled $24.2 million, and shareholders' equity was $66.7 million, or $8.54 per share.
4) CFM US business is matching the general trend in their subsector and in the front end generally. US orders are incremental for 1/2 tools which reflect the general front end equipment business to date, and the wet processing sub-sector fairly accurately.
5) As far as I know, they still have generally the lowest COO wet processing tools with the smallest footprint in the marketplace.
6) CFM is well positioned for the 300mm upswing and has already received orders SEMICONDUCTOR300, the joint venture between Infineon Technologies and Motorola, for an OMNI(TM) wet processing tool. I do agree with Carolin's statement foreseeing about 3-5 300mm new fabs kicking in '00. Full upgrades and new fabs (200mm or 300mm) are where you make your money, and if CFM has a quality 300mm tool, they will be in the hunt when the cycle pops. Oh, by the way, I am not aware of the progress of the wet processing competitors position in 300mm....has anybody heard anything in this regard?
7) Should CFM be successful with the Steag litigation on appeal, I suspect the legal momentum may cause a settlement should they not be seeking injunctive relief. Having a battled tested patent likely eliminates one of two arguments for an infringer, and should define the breadth of their patent claims leaving Yield Up et al. to solely argue non-infringement.
8) The teaming agreement with Maxim shows that CFM's management is keeping close to their customer during otherwise hard times for the equipment sector. CFM is generally known as customer friendly, so this is not shocking, but still good to hear.
9) While no orders yet for Prism(TM), it is supposedly an attractive tool from word at SemiCon West. I am not an engineer, but know a couple who play them on TV, so their positive vibes from SemiCon re Prism(TM) is a positive. When the cycle kicks into full gear, I hope that this becomes a super competitive tool.
So there you have my abbreviate notes from CC intertwined with my comments. This Q has not changed my bullishness, which is of course tempered with the boom to bust to boom business they are in, and the problems of being a small cap.
If you think this Q was pretty "crappy" then I guess your expectations were out of sorts. Sorry, I didn't speak up Duker earlier. I was expecting a loss +/- 15% of the estimate which is irrelevant given the number of analysts following (1), the distance from true sector growth, and the fact that the Street is looking forward more than at the present Q. If CFM tanks tommorrow - which it may invariably - feel free to sell me your shares. :~)
Good luck with your investments....SemiBull |
