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Technology Stocks : Cymer (CYMI)
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To: FJB who wrote (13818)2/1/1998 6:43:00 AM
From: Lex Luther  Read Replies (2) of 25960
 
Bob,
In regards to your question on service and spares, they are DEFINITELY high margin opportunities for Cymer going forward. I work for a semiconductor equipment manufacturer as a regional field service manager and I am speaking from experience when I say that spares ARE marked up anywhere from 100% to 200% or more depending on the part! It is almost like having a license to steal, but you don't have to believe me just go read AMAT's or NVLS's 10k and you'll see what I'm talking about> I would like to know if there are any semiconductor photo/process engineers or photo/equipment engineers that have CYMI DUV lasers in their steppers and if they could tell us what type of consumables the 5000 uses year to year. That would give us a starting point to estimate yearly spares sales based on the number of units in the field. It would be safe to say that by the year 2000 CYMI will have approx. 2000 lasers out in the field give or take what the competition manages to sneak in. I wouldn't be a bit suprised if you see their service and spares revenue be in excess of 25% of sales. Now I agree this may be wishful thinking on my part but the pace at which CYMI ramped up their support infrastructure would point to that type of growth. Also judging from the startup and integration time (which was posted in the conference call) once these lasers get in the field, I would say it is safe to assume that these laser systems are not of the plug and play variety, unlike the older I-line technology.This would also indicate that it was necessary to have a very highly skilled and trained group of field service engineers which CYMI is developing as we speak. By the way, their billable service charge is probably close to $200 per hour, so go work the numbers. Actually, the potential revenue and PROFIT growth from service and spares is enormous, and it definitely warrants further investigation so that we can educate all those "genuis" analyst who really haven't got a clue when it comes to this type of scenario. I'll get off my soup box for now but $3 to $4 EPS in 2000 is not out of the question. Is this stock undervalued or what? We need more facts so we can further evaluate this aspect of their growth so all you photo- process and equipment engineers start typing. Take care.
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