Helix Technology, a cold play on semiconductor equipment Message Board

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Technology Stocks : Helix Technology, a cold play on semiconductor equipment

HELX 38.08

+0.3%

Nov 26 4:00 PM EST

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To: j t jackson who wrote (783)	2/16/2000 2:34:00 PM
From: BostonView	Read Replies (2) of 1227

A little sweetheart press for HELX: Suck up some of this stock Vacuum pump maker ready to run By Courtney Smith, CBS MarketWatch LOS ANGELES (CBS.MW) -- I am a major fan of thesemiconductor area right now. We are in the sweet spot of a multi-year expansion. I've been holding several semiconductor stocks for some time. Now, however, is the time to buy the semiconductor equipment manufacturers. I like quite a few of them. Here's a company that is in the right place at the right time with the right products: Helix Technology(HELX: news, msgs). The company makes vacuum pumps for a variety of industries, including semiconductor manufacturing, flat panel displays, disk drives and optical drives. A semiconductor is made by shooting ions on an eight-inch piece of silicon. The silicon is then layered with metal and then the metal is etched away with an insulating chemical. Vacuums are needed to shoot the ions and to layer the chip. Helix is the standard vacuum pump for the semiconductor industry to create those vacuums. They have an unbelievable 90 percent market share! Their big customers are a who's who of semiconductor equipment manufacturers: Applied Materials; Novellus Systems; Varian Semiconductor; Tokyo Electron. Service is the key The company has come to dominate the pump business because of their obsession with pumps and servicing pumps. One of the key reasons for their success is the high quality of their service. They have an amazing service called "Guaranteed Up-Time Support." This is a 24-hour service that diagnoses and fixes problems within one hour! This is critical in an industry where every minute of downtime is worth millions of dollars. This type of service is critical in their success. As a result, they can charge top dollar for their pumps. Yet a high cost of roughly $10,000 doesn't deter the equipment manufacturers from buying their pumps because that $10,000 is not a big factor in a chip manufacturing system that may cost up to $5 million. The balance sheet is rock solid. They have cash and equivalents of $22 million but no debt at all. They have done some acquisitions in the past but they tend to be very controlled about it. I look for them to do some deals that will extend their core franchise. For example, they bought Granville-Phillips Co. in 1998. That company made instrumentation for vacuum control and measurement. That was a good extension of their franchise. Good growth potential The Street is looking for them to grow earnings by over 100 percent in 2000. I look for even higher growth and for a strong showing for the years following. Theprice-to-earnings ratio is very high at about 110. That makes me nervous. But the company is growing so rapidly and earnings are skyrocketing. That means that the P/E based on 2002 earnings is significantly less than the market. This is a well run company that has been able to dominate their niche to the point that they really don't have any competition. Their profitability will boom as the semiconductor capital equipment cycle continues to boom. Their gross margins are increasing dramatically. The bottom line is that they are just stepping into the sweet spot of supplying the semicap equipment companies. This should be a great run! cbs.marketwatch.com Enjoy!! BV

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