American Xtal Technology, Inc. (AXTI) Message Board

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Technology Stocks : American Xtal Technology, Inc. (AXTI)

AXTI 15.50

+3.5%

3:59 PM EST

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To: The Ox who wrote (245)	10/28/2002 2:20:17 PM
From: The Ox	Read Replies (1) of 290

axti cc notes (my comments: company in a very tough sector niche but holding on as well as could be expected. Waiting for improvement in end user demand. Could be a long wait. The stock price is very attractive the the hurdles the company is facing are substantial. Low volume shows little current interest in this company by the street. Very high risk to buy now, imo.) Disclaimer: I did my best to put forth what I heard. I may have made mistakes in the information provided in this post. Do your own homework before buying or selling!!! Young, ceo 3Q 02 Total revs were 14.9 vs 19.2 - at current prices, breakeven is about $18/qtr. Most likely this will increase as weak ASPs continue. 4th qtr cash burn rate should be reduced by 60% from Q3. Will concentrate on reducing Inventory to keep cash burn low. Net loss to be about 7.7 million in q4. R+D was up 200K qoq substrates revs were 11.7 vs 12.9 GaAs wafers sales slightly down. Substrate ASPs fell 9 to 10% during the quarter. Heavy pricing pressure. May be seeing bottoming but still not clear forward view. ASPs for GaAs substrates have dropped 30% from 2001 peak. Raw material sales up slightly (200k) Opto electronics slightly stronger in Asia. Gross margins in Opto very lousy. Won't move opto to Asia until they can afford it. Too expensive and too much capital burn to do it now. Asset impairment of 12 million in opto electronics equip retired 7.7 million in debt (6.3 million paid in adv of due date) Reduced cap expenditures plans for 2002 and 2003 Employees down 225 in US Substrates ASPs declined - but 5+6" diameter substrates increase to 33% of substrate sales - mostly to wireless InP declined substantially due to telecom weakness. Still believe AXT is leader in InP substrates. During past 3 years, in process of moving basically all substrate production to China. By end of q4 approx 90% of GaAs production will be moved to China (up from 50% at beg of 2002). cap ex will be less then $2 Million in 2003 in the substrate segment and less then $1 million in q4. Labor costs down substantially in China vs US. Ability to handle Inventory levels should be easier after move is complete. Most Inventory is geared to GaAs. 40% of Inventory is in materials. Only about 4 million in Inventory is Opto. Half revenue may be inventory turns in q4. Half booked as orders. Greater efficiencies should start showing up in Q1'03 since the move to China will be mostly over. Agilent is leading LED customer. May get new orders in Dec. after testing new products is complete. Won't know if they will get new revenue from this until test is done. Will need a week or 2 to ramp up production if given the go ahead. Part of test is based on time (min 1000 hours product life) Substrate and Opto allowances increase is larger due to customers returning ordered product not needed. For Opto to break even, they will need revs from $6 to 6.5 million for this segment. If ASPs keep falling $12 million breakeven for substrate segment might need to be raised proportionally. Keep stressing that they are currently the leaders in 6" substrates, better yields than competitors. Can not tell if they lost market share but it's very possible. Wireless customers especially cost conscience at this time. RFMD and SWKS are just now moving to 6" GaAs substrates. Still a few years away from 8" production lines. Growth in Green LED for traffic signals in China/Asia Pacific being seen. Could sell real estate assets in Fremont if cash is needed. No plans for a new revolving credit line. Waiting for customers to qualify their new high brightness LEDs. Will try hard to reduce cash burn until then. Order visibility limited...no guidance when company will be profitable going forward. Hearing rumors that a "weaker competitor" is blowing out product to stay afloat puting additional pressures on ASPs. Yields are "quite good" on the new high brightness LEDs.

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