*AV* --- My focus has been on consolidating positions and circling the wagons around 24 stocks. However, we always like it when stupidity is displayed by the institutions and money managers. We sent readers a very long excerpted article on VECO, which we knew was going to get eviscerated due to an earnings warning. However, we did not think that the stock would be decimated as some of the "boys" decided to obliterate the stock at the open. We watched the selling and the volume come in and jumped aboard VECO almost at the open price as we watched it drop after the heavy open and then caught it at under $61 as it started to make its way back. Even Pat would agree that this was an over reaction to the somewhat misinterpreted news.
The second stock was good old CYMI at such a ridiculously low price. But then, maybe I should just post here what we sent out.
Just a quick note that we have been active in two stocks today, even though the market is a mess, due to the jobs report.
It appears that the lengthy summary of the VECO situation (pre-announcement)led to an enormous over reaction which we decided to participate in. VECO was obliterated for what appeared to be something that what not as nasty as the stock drop that occurred. VECO appears to be rebounding. VECO is no longer a tier equipment stock because it share value become prohibitive. But with almost break even earnings up till now, mergers to fully digest, some promising new business, and with third quarter earnings per share expected
to be in the range of $0.18 to $0.22 per share, VECO has turned around and is no longer overvalued.
Sure, the third quarter numbers are lower than the Company's prior guidance of between $0.38 and $0.42 per share, but the company is about to go into the black and maybe even get a PE this quarter. As VECO collapsed to less than $60, which is almost a 25% discount to the last entry ($78.50), we
decided it was well within our acceptable acquisition zone. After all, we had a collapse of share price on enormous volume, as some idiotic fund or institution dumped a gazillion shares. This met our criteria for looking
outside of the 20 stocks we are focused on. Insiders own 16% of the stock with 8 insider sells, totaling 353.0K shares over the past 6 months while Institutional ownership is close to 72%, or 85% of float, with net institutional buying of 3.53M shares (+17.23%) prior quarter to latest
quarter. Some young pup chickened out and did not read between the lines as more than 12 million shares have traded so far today, on a stock that has 23.7M Shares Outstanding and 19.9M shares in the Float. We would surmise
that a new adjusted price for this stock has been created as a result of this over reaction.
The second major event for the day was the major average down in CYMI that allowed us to get the average entry price below $30 per share. No matter what ever else is happening in the sector, Deep UV lithography is not going away. Either new Canon, Nikon, SVGL, or ASML systems will be purchased, or we will see some of these systems that are convertible from i-line, be converted and upgraded to DUV systems. granted there are not a huge amount of systems in the field with the convertible platform, but there are enough
to allow for CYMI to weather the storm. IT is not a matter of if DUV lithography dominants the industry for manufacturing devices, but rather a matter of when this will ramp up significantly. And when it does, we would expect that CYMI would participate in this arena.
In both cases, we believed that we were grabbing shares from much weaker hands and putting them into stronger hands.
If we are correct, we should see the market stabilize and calm down starting next week. We might even get two days over successive positive action over the next few weeks.<GG>
BTW - the following was the lead story in our Radarview news section this morning, along with our opening comments relative to the stocks we were monitoring.
The table above has been expanded to 20 stocks and will not be changed for at least 1 week. The first 3 groups are those stocks that represent the tier groups and should perform better than the rest on any recovery, and should be some of the first to recover. The final group (#4) consists of the 500lb gorillas in their respective businesses and will be looked upon as perceptional bellwethers (even though they should not be). Other than the DOT stocks highlighted in blue on the DOT table, we are considering tightly focusing on the above 20 stocks unless we see a dramatic surge in volume or price for other stocks in the universe. If not, we will be looking for these 20 stocks to lead the way in the next positive cycle up.
October 5, 10:39 PM ET - Veeco Sees Lower Than Expected Q3, Pres/COO Resigns
(Reuters) - Veeco Instruments Inc (VECO) said on Thursday it expects third-quarter sales and earnings to come in below expectations, adding that the firm's president and chief operating officer (COO) Christine B. Whitman had resigned. Veeco said it sees earnings of 18 cents to 22 cents for the quarter ended September 30, compared with diluted earnings of 29 cents in the year-ago period. Analysts on average expected Veeco to earn 40 cents per share, according to First Call/Thomson Financial. The company said it had previously expected third-quarter earnings of 38 cents to 42 cents per share. The company now expects fourth-quarter sales of about $110 million and sees earnings of 32 cents to 37 cents for the quarter, chairman and chief executive Edward Braun said in a statement. Braun also announced Veeco's 2001 forecast of about $570 million in revenues and earnings of $2.40 to $2.50 per share.
Veeco said third-quarter sales climbed about 7 percent to $93 million, but came in below its expectations of $104 million for the quarter. Last year, Veeco had third quarter sales of $87 million, the spokeswoman said. The company said the lower sales and earnings were mainly due to its recently acquired CVC division, which had a $7 million sales shortfall, due to delayed orders and shipments from data storage and specialty semiconductor customers, resulting in a 15-cent drop in third-quarter earnings per share. Veeco said it was also hit by higher costs at its Commonwealth Virginia ion beam deposition operations, which were relocated to its Plainview facility as of Sept. 30. The company said it had taken "corrective actions," including the restructuring of the CVC management team and more downsizing of CVC operations "to better reflect the current order rate."
Veeco's orders for the third quarter were approximately $175 million, a record, which surpassed the Company's expectation of $135 million. Orders were up 32% sequentially from the second quarter and increased over 100% from the prior year. Half of Veeco's third quarter bookings were from optical telecommunication customers, of which $80 million were for Ion Tech SPECTOR systems used in the manufacture of Dense Wavelength Division Multiplexing (DWDM) filters, and $10 million were for metrology and active device deposition systems.
On a positive note, Veeco received an order in the third quarter for a new 10-target, ultra high vacuum physical vapor deposition/ion beam deposition cluster tool valued at over $8 million for delivery in 2001. This order is an example of the strength of the Veeco-CVC merger in terms of product strength and customer acceptance. Veeco's Ion Tech subsidiary, currently increasing production in response to significant demand for its SPECTOR(TM) IBD system, increased its revenue 50% over the prior quarter, despite delayed shipments in the last weeks of the quarter. These delays were due primarily to longer customer acceptance test times associated with the addition of a newly developed in-situ, automated optical measurement system (OMS). The missed shipments at Ion Tech are scheduled to ship in the next several weeks, but caused a $0.05 earnings per share miss in the third quarter.
Edward H. Braun, Chairman, Chief Executive Officer and President of Veeco commented, "Despite strong market demand reflected by record order activity, quarterly shipments from CVC and Ion Tech divisions were disappointing. Corrective actions have been taken to assure sales and profit growth for the fourth quarter and 2001. Looking ahead, we are optimistic about the prospects for Veeco's growth based upon our strong bookings of optical telecommunication equipment and metrology products, as well as continued strength in semiconductor products."
Mr. Braun continued, "We are revising our revenue and earnings growth forecasts for the fourth quarter of 2000 and for 2001 to reflect a more moderate sales and profit ramp going forward. We are currently forecasting that fourth quarter 2000 sales will be approximately $110 million, with earnings in the range of $0.32 - $0.37 per share. For 2001, we are forecasting revenues of approximately $570 million with forecasted earnings per share in the range of $2.40 to $2.50 per share. These revised forecasts are supported by a significant backlog and strong customer acceptance of our products. Our focus going forward will be on improved operational execution at CVC and Ion Tech, our recent acquisitions."
Veeco is hosting an investor conference call at 9:00 AM ET today, and intends to release complete financial results on Thursday, October 26th after the close.
Well, aren't you glad you asked, and got our standard short reply?<GGG>
AV |
