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Technology Stocks : Cymer (CYMI)
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To: George Coyne who wrote (24212)2/8/2000 11:58:00 AM
From: Rustam Tahir  Read Replies (1) of 25960
 
Does anyone else have any opinions regarding the inventory write down that CYMI took in the last quarter? Without that write down earnings would have been .39. One of the things that bothered me was that when I spoke to CYMI after the last write down in the 2nd quarter, they told me they were all finished and inventory was clean. Anyway, I accepted the first round of write downs because of the breakneck speed they were forced to manufacture before the downturn occurred. Then, during the downturn, they developed a new laser system which naturally lessened demand on the first system. But this write down (at least the 1.3 million of it) strikes me as manufacturing sloppiness, despite their stated reason that spares and parts were not needed because the reliability of CYMI 's products was better than expected. Their statement about changing over to an Oracle based ERP system is evidence that their manufacturing controls were in need of repair. If there is a flaw in Cymer's management team, it is in their operations area. I just hope that this write down is really the last.

The other possibility is that CYMI could be massaging the numbers a little. If these spares and parts can sold in the future why write them down now unless because they had such a blow out quarter that it could be easily done so without damaging the eps surprise. And if they do sell them at a future date, then the margin on them would be 100%, thus a boost to the eps if they need to goose the number to beat estimates. Again I don't know how you guys feel about manipulations like this, but it does concern me.

rustam
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