Eugene,
I finally listened this evening, here are my impressions.
The overall tone of the call, while conservative, seemed full of justification for optimism. Hill repeatedly said that the Asian mess will have to sort itself out over the next two quarters, but the last two quarters of '98 should bring improved visibility with respect to Asian expansion plans and their ability to finance expensive stuff. He seems confident that the worst they will do next quarter is flat, and should make 15% increased revenue overall for '98.
Here are some of the things that struck me as important.
Varian PVD aquisition seems to be going OK. It was originally thought to be immediatly accretive, but I wrote down in one place slightly dilutive and in another place break even. (I guess I should have recorded the call.) Also with respect to PVD, said was pleased with technology aquisition and that the cultural assimilation of Varian staff into NVLS's accelerated plan to bringing this PVD to market is being well tolerated by the Varian people. Hill did not seem to think that new PVD will hit 56% gross margin benchmark until 1999, and may be a slight drag on overall margin until then.
They are maintaining a strong commitment to R&D. Good for long term, IMHO.
Backlog has been closely inspected, seems firm. Orders are strong, days outstanding on receivables down to 70 from 80, so there is not a lot of foot dragging getting the checks in. Balance sheet is strong, cash increasing (although I sure wish we had that $$ we paid out to AMAT!!).
The newer tools seem to be meeting with good market acceptance. Specifically mentioned Intel, Motorola and AMD in context of Speed tool. Said that they have shipped copper gear to "one" customer and will soon be making a Cu announcement. Was otherwise evasive with respect to Cu.
I was particularly pleased when Hill said that about 40% of revenue increase comes from gain in market share rather than overall industry growth.
Leading edge tools are well positioned, mentioned High density plasma, Cu, and low-k dielectric specifically. Does not expect 300-mm wafer tools to be significant until 2000, but will be ready for those who boldly go there.
All in all, while not wildly enthusiastic, seems to think they will do OK this year and really well thereafter. |
