A quirky newsletter's take on Cymer...
CYMER: IS THAT YOUR LASER
or are you just excited to see me?
A CYMER (CYMI) eximer laser is like describing a sex act: It's a molecule that is paired with 2 atoms, called "dimers" with loose morals. The threesome then gets "excited". The laser menage-a-trois mixes gases to produce Deep Ultraviolet Light (DUV). The machine operator then smokes a cigarette when the act is over.
Semiconductor manufacturers make use of this high-tech coupling by incorporating the DUV lasers into their photolithography equipment, which in turn allows them to put more circuits on a chip, thus making and selling more chips, and smoking more cigarettes.
Robert Akins along with fellow UC San Diego alumn Richard Sandstrom founded Cymer in 1986, with Akins bringing in his experience of working with lasers at HLX, a maker of lasers for defense systems. In 1987 Cymer switched its focus to using its laser in semiconductor hotolithography, and a year later shipped its first product. It was an immediate hit.
But Akins had something else in mind: a bigger, more powerful industrial laser with a well-turned ankle that would really turn heads. All he needed was a couple of million for research and
development, and he'd make pigs fly.
$2 million in flying-pig money came courtesy of Mitsubishi's semiconductor group in 1991. The following year Cymer released its high-power industrial laser, then licensed its technology to Seiko
for use in the Japanese market.
By 1994 Cymer had shipped 78 laser systems, putting the company on top of the excimer laser heap, even though the company still hadn't shown a profit.
The company turned profitable in 1995 with the release of its ELS 4000F photolithography production-quality laser, which replaced the durable Chevy-type model with a Cadillac.
The following year (1996) Cymer debuted the 5000 series laser: A Rolls-Royce with Ferarri speed offering higher stability, more precision, increased production capacity, and built-in cup holders
between the drivers/passenger seats.
The new laser became the excimer laser version of Jurassic Park: sales of the more expensive laser reached 145 units right after Cymer went public. Seiko, one of Cymer's customers, became a contract manufacturer of Cymer products. In addition Canon and Nikon, who together account for about 60% of Cymers sales, each have an ownership interest in the company. Cymers sales for '96 were up 251% over '95, with income up 6,400%, the EPS up 2,900% and the profit margin 20
times higher.
In 1997 the company expanded its overseas operations by enlarging and improving its regional service and support network with centers in Europe, Japan, South Korea and Taiwan. This made Cymer the Intel of the excimer laser world, with over 80% of the market under its control and more being added daily.
But even Goliath had his David.
Paranoid investors, encouraged by institutional downgrades started dumping Cymer stock last month on fears that the industry would shift to 0.25 micron chips. Rumors began circulating that Cymer's major customers were suffering technical problems related to its lasers. Cymer's stock dropped 18% in one day.
Suddenly, every analyst was Alan Greenspan, citing Cymer as a leading indicator for an eventual decline. Cymer was downgraded from "buy" to "hold". Documents were released implicating Cymer in the Kennedy Assassination, Watergate, World Wars I and II, the Cali Cartel and
anything else that had taken place over the last 200 years.
Cymer responded by reporting third-quarter revenue of $57.5 million, a 216% rise over the $18.2 million in the same perion last year. Net income topped the most optimistic anal-yst by 10%. The stock immediately shot up 3 1/8 points.
Then along came UBS Securities ( the company that puts U before the BS). Anal-yst Mark FitzGerald downgraded five semiconductor capital equipment stocks because of concern about the "impact on business from the Asian currency crisis." Cymer wasn't one of the five, but investors attempting to read between the lines thought they saw Cymer in there somewhere. Nothing could be farther from the truth.
Cymers biggest customers (all Asian companies) own a stake in the company. So the company isn't going anywhere but up. In addition, Cymer has a huge backlog of orders and has received a significant number of orders since the close of the third quarter.
Earlier this year, when Cymer stock was in the low 30s The Wiz announced in his newsletter that Cymer was worth $100 a share. He then watched the stock climb up into the 90s before splitting
2-for-1.
Right now, The Wiz believes the company is worth $60 a share post-split price. Currently you can buy the stock at $17 and change.
Cheap at triple the price. Just ask Buck Rogers.
the-wiz.com |
