CC notes:
- disk sputtering systems acctd for a little over 75% of rev in FY97
- RPC(newly acquired) shipped 2 systems, but did not log rev. They have
adopted our conservative rev logging.
- Intl 83% in Q. 64% in 1997(41% in 1996)
- substantially all of intl sales are to customers in the far east.
- Major customers in 1997 FY:
Matsubo 37%(32% 1996) => Fuji electric, Mitsubishi, Hitachi, Sony
HMTT 17%(13% in 1996)
Trace Storage 15%(8% 1996)
- backlog $74mil. Concentrated among far east customers
- received orders from 5 customers for disk sputtering systems during the Q.
- Fujistu ltd is a new customer for the MDP-250B.
- received an order for the first MDP-250c, used for 5.25" MO disks suitable
for near field recording.
- most of the disk sputtering system backlog is currently shipable for rev during
the first half of 1998.
- we have not experienced any material rescheduling of backlog during the Q.
- we did see some customers delay future expansion plans which may effect future
order rates.
- GMs 32.9%(up from 30.2% in SepQ). Up due to reduced system costs and economies of
scale. GM model range is 33% - 37%
- R&D 7 - 9% model
- SG&A model 7 - 9%.
- other income and expense had some unfavorable currency adjustments and some
lower interest income
- tax rate for 97 was 35%, still forecasting 33% for 98 as a result of more intl sales.
- repurchased 475k of stock during the Q(3.6% of shares outstanding)
- RPC was purchased for ~$1mil + future payments equiv to 25% of any earnings
lts to $7.7mil. Expensed $300k in process R&D related to this
- Inv grew by $1.7mil. $6.7 increase in systems shipped, but not yet received by customers
partially offset by $5 reduction in raw material and WIP. All systems were shipped against
fir, P.O.s and should be counted as rev for the MarQ.
- 398 employees. 117 R&D, 183 Manu, 98 admin
- productivity grew. Annual rev/empl = $393k up from $369k in 96
Norman Pond
- pleased with perf in 1997.
- position in market has strengthen and we've
- 3rd year of being public. Compd growth of 87% those years. It's been 3 good years
- the future of HDD industry has been in turmoil as of late. Lots of bad news out there.
- How is this going to impact us? Clear that industry with excess capacity will not be buying
as much equipment as they have ould have otherwise. It's a major negative and a major concern
of ours. But that's not the end of the story.
- industry continues to undergo technical change. The faster this occurs, the faster the equip
goes out of date. So we view the tech change as an opp rather than a problem.
- The solution to the excess cap is the continued growth in storage demand and technology
- 1998? Outlook is not clear. We are very concerned about industry. We are startying with
a good backlog for 98, approx 2 Qs of rev. Actually some of the orders we received during the
Q were not expected. At this point we are planning on approx flat rev for the Year, but we don't know
exactly. Will play it by ear over the next several months.
- we believe that the companies with the right eqipment will do well in this industry and we will
continue to work with those customers.
- we also continuing efforts to grow flat panel biz
Q&A
=> clarify the 98 projections. Is that for the company or sputtering systems side only?
- within the accuracy of the #s, the answer is yes to either. Biz in non-disk will be up a little
bit, but it's starting at a small base. Will not have big impact on overall rev
=> GM expectations? Sputtering system pricing? Any competitive issues?
- GMs have gotten a little better lately. There will be some negotiation, but we will be OK
cause of our technology. Prices won't change dramatically either way. More of the same.
=> Matsubo in 1998? Will they all buy more?
- generally yes. They are all adrr continuing expansion plans. But they are watching demand
In japan most budgets are stup in Mar. We will know more then.
=> any way of measuring new capacity vs. replacement capacity?
- crude to calc. Can't really do it. No hard concrete evidence of it either way.
=> flat rev for 98? Is that just being conservative? Or is this looking into 2nd hald of 98?
- this is a genuine view, not being overly conservative. Most of Japanese rev will depend
on march budget #s. Could do more, could do less. Must wait.
=> asian effects of currency?
- haven't seen big impact. More worried about Yen and mark rather than far east. Because
Anelva is Yen and Blazars is mark based. That's where the concerns are rather than what
the ringgit does
=> 250C order. How much $ and what is the market?
- just a one off order right now. Lots of interest in that market. In the past that industry just
coats one side of the media and we coat both. They are now looking at coating both sides.
Quinta and Terestor has interest in double side, now our archit. Is competitive. Could be significcant
rev in the future.
=> when will it ship?
- April is current plan. A lot of uncertainty. We both understand that. Might have some delays
=> Fujitsu they have parge plans. Will there be more orders? Sizeable?
- hopefully. Big plans, but we do not know. Could be end of 98 or pushed into next year.
=> RIGEL(?) system?
- we do not know when we will ship it. Could be soon. There is pressure from customer to
deliver, but it has to work first. Could deliver it this Q, but rev will prob come in JunQ.
=> deprec and amort?
- everything was $4.7mil last year
=> GMs?
- don't like to project, but similar in aggregate
=> how quickly can you adjust to a downside in demand? Cost structure, etc.
- pretty quickly. Building very little in speculation. What we have in the pipeline
are all on order.
=> given guidance and the good backlog, what is the linearity?
- do not want to make forecast.
=> all of current backlog in 1st half?
- no, some of it will go into 2nd half.
=> % sputtering systems the same as in backlog?
- more heavily concentrated in sputtering systems due to longer time frame for orders
=> how many systems shipped in DecQ?
- 13 for rev
- won't comment on further details on who we got orders from
=> % of far east in backlog?
- no. But it is substatially intl.
=> update on new carbon overcoat equip.
- Bob - working with several partner comapnies to develpo tech. Ion-beam we
have successfully deposited carbon on both sides at the same time. Also, ECR-CVD
project where we have similar performance. Then there is filtered carbon arc - have assembled
some of it, but it is a year or two away from being a practical device.
=> rev contribution in next few Qs?
- think it should contribute next year, but not sure whether it will make it into next few Qs.
=> transition from static to inline?
- it's accelerating. I think every company in the biz is now using some
static machines. Nobody is saying anymore that inline is going to be able to compete economically
or technically much longer.
=> 60 machines during 97?
- no, not that many. Market share in the neighborhood of 50%.
=> any DSTAR in backlog? Or RTP?
- usu don't break it down that far, but there is that one DSTAR that we plan on shipping this Q
=> dialog in US for potentially new customers? Are you close on new customers?
- I would say we have a dialog with customers in the US, but it is very hard to make them switch.
We can't see an eminent change coming. No definite pland to add any new US customers |
