11/6/00 MSTN AEA conference notes
vcall.com
Brad Mattson
- Merger is combined 50% higher than current revenue
- Could spend all day to determine where we are at in the cycle
- 1975 was bad year and five year lean cycle ever since then.
- Our industry grows on average 20% a year.
- 1998 was upsetting becasue people missed 1984 and 1975 cycles.
- MTSN is 10 years old
- Brad started at AMAT 20 years ago
- This year we grew at 100%, invest in R&D in downturns because scrambling to meet shipments in upturns
- Incredible abilty to make more transistors in ten years
- 2 Billion for new fab plants, we make their business capital investive and cause customer big writeoff for depreciation.
- We are running out of space and running factory 24/7
- We are investing in new architecture, many companies who by BRKS platform cannot differeniatate between their andother competitor products.
- We building out own software and robotics. We want the best technology for the wafer. We architecture to gain processing speed.
- The big semi equipments companies are getting bigger and creating fear that you can't deal with the smaller companies.
- Merger helps create critical mass and multiple product lines.
- Company is being discounted on market cap compared to competitors.
- 51% gross margin.
- Steag is the biggest entity of the three in revenues. There is a hangover in the market about not having any info on Steag.
- Steag negotiated at when MTSN was $42.50. Now below book value.
- Industry is consolidating in last three years. The big are getting bigger. The top ten are getting 90% of the money. The 190 companies fight for the other 10%.
- We are #14 in size. Thinks NOVL and Varian will complete their mergers soon.
- Each of the three groups by MSTN. We will be 1 or 2 in each of these sectors.
- NOVL is primary deposition, three types of deposition
- AMAT is number one in each sector that it has products
- AMAT platform is better than BRKS.
- No one semi equipment company has more than two dominance other than AMAT
- Tough to jump in new sector and succeed
- Trying to be become a multiproduct company alternative to AMAT
- Customers want fewer better quality suppliers. We want to became vendor of choice.
- 500M of rev combined this year.
- Strip is our most mature product line and number one in sector
- STEAG is rpg and was losing to AMAT but only alternative to AMAT since only two with any market share.
- 300mm transistion is the future and will be only fab being built. 30% market share now in strip and will get 50% market share in 300mm.
- Wet products group - no dominant supplier. Market begging for someone to come in and be the dominant supplier.
- MOT pissed everyone off in 1998 by saying it would buy all this 300mm tools and not buying any.
- Many gave up the R&D in 300mm in 1998 due to downturn.
- Peak profitabilty is next year, peak revenue year still out two years. We feel good where we are at in the cycle.
- AMAT has done better than small companies in downturns. Downturns have crushed small companies. In a downturn, you need many product offerings. We want to be a big company.
- In downturns, customers buy technology. In upturns, people buy capacity.
- Last quarter book to bill was better than industry, record revs, 20M order which was better than 10M previously. 20M order is 300mm.
- Integration is 80% of my time.
- Web processing buys are more of a capacity buy than technology buy.
- MTSN using the NVLS high profitabilty model with minimum 50% gross margin. They want 50-60% gross margin in their area. AMAT has 45% product lines and 55% margin lines.
- We won't have 50% gross margin in the wet business but working to bring it up.
- Most mergers fail so stock price it getting hit from merging three companies. Most that succeed if integrate in 90-180 days. Most take one year and longer and fail. CSCO may be only one to continually to integrate successfully. January 1 is start of integration. Want to complete it 60 days.
- You can't put a program that improves management relationships. These executives want this deal to work. Steag, MTSN, and CFM management have known each other for four years.
- We were 100M last year and 700M next year after merger. The customers love this deal. They want to meet the other companies.
- We are picking up huge revenue base without much dilution of shares.
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Ran about 40 minutes so I listened only once. Brad talks fast and is an excellent speaker.
Brad had alot of charts so translation to text without viewing the graphs was difficult.
Jack |
