Bruce, not to be nitpicking but:
You'd written:
>>According to the CC and release they stated 10 to 15% revenue decrease in Q-1 as compared to Q-4 97. That comes to approx. 21.6 to 20.4 cents ps. >>
I assume that you just took 24c/sh earnings and decreased them by 10-15%. This is not the right way to project the impact of reduced/increased output. CYMI carries a lot of fixed costs that do not change no matter how many lasers they sell. If they sell 15% less lasers, their revenues will fall by 15%, but their expenditures will not fall proportionately. The 15% decrease in sales will result in much higher decrease in EPS and even without additional investment in R&D, CYMER's 1Q EPS with 15% smaller sales would fall way below 20.4 c/share.
To put a positive spin on the same topic, even a small increase in revenues later in the year (e.g., from the sales of more expensive new lasers, or from selling more lasers than predicted) could create a considerable improvement in EPS.
Financially, early 1998 could be quite difficult - R&D expenses will be incurred without being (partially) offset by sales of more expensive 5010/ Orion lasers. Furthermore, in anticipation of new laser models, DUV manufacturers have little incentive to increase on-hand inventory of 5000 series lasers, this does not help sales. Therefore, I do not look at 10c/sh for 1Q98 as an easy target.
By the same token, as the year progresses, R&D cycle will start winding down and additional incremental revenues from sales of more expensive models should kick in. For these reasons, FY98 estimate of 40c/sh strikes me as very conservative (with usual caveats - stepper demand does not deteriorate below current 460 systems forecast, introduction of new lasers will not run into unforeseen design problems, etc).
Having said that, I must also say that I don't think anymore that actual earning numbers are very important for the stock price. Analysts representing the interests of major MMs could always find a reason for upgrades/downgrades reflecting the interests of their clients. At the moment, CYMI is priced at 50 x FY98 EPS estimates, but this does not tell me much about the near-term stock direction.
Regards,
Y. |
