Notes from annual meeting:
Planning for flat 1998. Asian turmoil potentially affects not only asian fabs but asian owned fabs in rest of world. Elftman attended Semicon Korea and reports that Koreans still in assessment mode. But company still bullish on long term potential for the industry. No announcements on current backlog, but it appeared that it hadn't grown any in the last quarter. Company believes it competes for $3 - 3.5 Billion market which will grow to 5.5 - 6 Billion by 2001/2002. FSI goal for 2001 is $1B revenue, 45% GM, 12% OP, 10% Net. Current capacity is good for $600M. Revenue growth needed to increase GM's.
Company believes industry is 3-4 quarters from turn in industry. FSI Capital spending reduced in 1998 to $12M down from $42 M in prior year.
3 new customers added to base list for Polaris product line. This bodes well for future. New 300 mm Polaris tool shipping this week.
Market share goals for 2001 timeframe are 15 percent for Surface Conditioning(currently @5%), 20% for Microlithography(Currently @ 8%) and 50%for Chem Fill (currently @ 40%). With new Fab starts down to 32 in 1998, it will be a down year for Chem Fill.
Company hoping to beta site 2 Zeta tools(300 mm batch cleanign tool) in 1998.
Chem Fill is a CMP play.
Company believes that industry consolidation will be a continuing trend; i.e., the little guys will get eaten. The comment was made in the context of FSI is not a little guy, so it will be eating.
Balance sheet is in good shape with book value of $10/share, $83M cash, $42 LTD.
My basic conclusion is that management doesn't have more than 3-6 months of visibility, they believe that this will be a tough year with little growth over prior year, and that things will take a while to sort out. These guys bet big on a turnaround in 1997 and they didn't see it in 2 of their 3 their businesses. So they are sweating the potential for a flat year revenue wise, because if that happens, their costs will continue to grow and they may not be willling to shrink costs any further.
Sorry for the random nature of the notes. |
