Nikon earnings released today! They are revising '98 sales upward. Maybe they will make more steppers than anticipated.
interactive.wsj.com
However, Nikon revised its group sales estimate 2.6% upward to 400
billion yen from its original forecast of 390 billion yen.
Nikon said it forecasts parent pretax profit will decline 24% to 12.5 billion yen for the current fiscal year. It expects net profit to fall 42% to 5.5 billion yen. Nikon expects sales to increase 6.5% to 315 billion yen.
Both Nikon and analysts said greater-than-expected costs associated with the transition to next-generation excimer laser steppers from the more conventional i-line steppers will hurt the company's earnings.
"The cost for making excimer steppers increased more than we originally thought," said Takashi Ogawa, a general manager at Nikon.
"Increasing expenses related to new steppers is pushing down earnings more than expected," said Kunihiko Kawada, a senior analyst at HSBC James Capel.
According to Hiroshi Yoshihara, director of equity research at Salomon
Brothers Asia, the profit margins for the new steppers are currently lower than profit margins for conventional steppers.
"The number of excimer laser steppers is increasing, but as the profit margins are low now it can't offset the decline in the profits of the i-line steppers," Yoshihara said.
Analysts said profit margins are low now because the company is unable to enjoy the full benefits of economies of scale. Analysts also said new excimer steppers are more difficult to manufacture and take about 18 months from order to delivery.
Over the longer-term, however, analysts said the company should benefit from more production.
"We can't expect such a high profit for the new models, but on a long-term
basis, three to four years, we can expect that profitability will improve," said
Yutaka Sugiyama, director of research and a senior analyst at UBS
Securities. |
