I am increasingly convinced that those who think that nothing has changed are deluding themselves. The company can say that nothing has changed because they wrote a very nice risk section to their 10-Q (nothing has changed, we told you it was risky ;-). The question is whether the "change" is all that terrible.
Here is what I think has changed (and I'll throw in a specific scenario to illustrate the point). I think Komatsu and/or COHR are about to get some orders. Say you are the Monty analyst. COHR is naturally trying to pump their stock just like everyone else. You also cover COHR. Well they tell you that they have a handshake agreement with one of the big 4 to buy their DUV laser. They want you to upgrade COHR. You figure COHR is too diversified to have this impact them much, so no upgrade is warranted, but CYMI's story is now weakened (they no longer have a monopoly). You downgrade CYMI, but you don't say the real reason because you don't want your information pipe from COHR to dry up. COHR has leased space specifically to entertain/train customers of their DUV laser. They've stated that they think they will get 20% of the market next year. I think it is likely that COHR wouldn't make this statement unless they were sure it was going to come true, and I bet they are feeding more specifics to the analysts who cover them. A week later, the MS analyst gets the same story from COHR and takes the same action.
In my mind, this alone would justify a cautious analyst to get on the sidelines. They'll want to see how this plays out. CYMI is now transitioning from monopolyst to competitor. They have some definite advantages, but they are a new company (from an operations point of view) and no one knows for sure if they can market, support their customers and fight off the competition. So the analysts will wait and see.
So as a shareholder we have to decide what to do. I pray that Akins et al don't take this having 60% of the world's DUV scientists seriously. The fact that some on this thread take such statements seriously is perhaps the most frightening point against my holding CYMI. Holding the customer is much easier than breaking into a customer. The business is CYMI's to lose. The question is, do CYMI's customers like them? Is CYMI responsive? Are the products reliable? Are they cheaper than COHR? The few statements I've heard on these topics have not been encouraging.
Another area of concern for me is that CYMI is sitting on a monopoly, but they don't have monopolystic margins. 40% ain't that great. COHR and especially Komatsu have the financial strength to step in and buy the business. CYMI doesn't see to have the margin to match aggressive pricing action.
Nevertheless, CYMI has been dominating the early evaluations and I believe there is a headlong rush to .25 micron. They are almost locked into winning most of the DUV business through 1998. Beyond that, things are less clear. Investors just have to get used to the fact that this is now a horserace with more than one horse. CYMI has to demonstrate that they can win in such an environment. A lot of people have compared CYMI to Intel and MS. This is bull. CYMI has no monopoly on DUV that will stand the test of time. We can only hope that they can keep winning business because their product performs better and their service, support, COO and pricing are competitive. These are the key factors now. I would love to hear more comments on these elements from those who have first hand experience with the products. |
