Christopher --
I had trouble reading the 3-D graph, too. For laser revenues I wrote down, "Over $200 in '98 and $800 in '01." ($ in millions). Estimate for '97 was $200M and Cymer hit $203M.
From my notes:
All issues on the ballot passed. Shares for employee stock option plan increased by 1,250,000. All directors approved.
Nikon, Canon, ASML, and SVGL all incorporate Cymer's lasers.
1997 saw 213% revenue growth and 300% net income increase. Manufacturing was doubled. Company can now produce 1000 lasers per year, "more than the industry needs." [For transition estimates, see: cymer.com ]
Ramped from 15 test bays to 45. Seiko building 10 more.
Employees expanded from 336 to 809.
Expanded from 5 to 19 points of presence world-wide.
On competitive front:
* Only proven DUV laser technology. Have greater than 85% of market share.
* Only full-scale manufacturing capability. Presently18-month lead on competition; could expand to 30 months.
* Only global service and support team.
* Have achieved critical mass of scientific talent. Have world's finest excimer laser scientists and engineers and continue to recruit. No problem with turn-over. Joining a winning team is satisfying. Most were in military-related position and are glad for work. San Diego's not a bad place to live. [Aikens compared La Jolla to downtown Moscow.]
Market position:
* More than doubled installed base last year.
* Chipmakers who ultimately use Cymer products include every maker in the US and nearly every maker world-wide.
Industry conditions:
* DRAM price/supply imbalance
* Regional economic challenges: Japan, Korea, SE Asia, North America --- Japan is the biggest.
* Lithography is hot area: no matter what, you must have this.
* Revenue flatness, but no down-turn for next 2 Qs.
* More cos are delaying transition to 300mm and using die size instead. This helps Cymer.
* Stepper to scanner transition --- tool of choice --- 50 - 80% of tools in '99 will be scanners.
Four Steps to Meeting Goals:
1 -- Continue aggressive R&D to create new products. Spending more than ever before.
* accelerate time to market
* expand product line
* enhance KrF
* next generation KrF development
* next-next generation ArF development
* 5010 Series --- first shipped in Q1 '98, ahead of schedule
* Orion KrF excimer laser, will ship Q3 '98
2 -- Enhance global service-support network.
* Japan --- taking new facility near Tokyo
* trainers, tech support, spare parts
* rotation program for personnel --- both in San Diego and Japan
* increased locations from 5 to 19
3 -- Focus on chipmaker pull-through demand.
* co-operation and communications with customers.
4 -- Fortify corporate process and infrastructure.
* Hired VP of Process Quality, Ted Holtaway. Took 1 1/2 years to find right talent. Will focus on:
* Market analysis
* Product creation
* Capacity planning
* Goal is to improve manufacturing process control.
Comments on financials:
$98 million in cash. No additional financing required at present time. Want to convert subordinated debt in 2000. There are substantial growth opportunities. Historically we are cautious. Eventually there will be additional opportunities.
To remain the leader, money alone isn't enough. Must have world-class talent. Cymer has it.
Overall, the semi-conductor industry is expected to contract over the next couple quarters while Cymer is estimating they'll remain flat, with return to growth in '99. Japan remains a challenge and no one knows when that'll change. Anyone who wants to stay competitive will need Cymer's products. The company is on target and ready for the ramp when it comes. Page 7 of the annual report states, "Analysts expect the DUV market to grow twice as fast as the overall lithography market during the next several years. Cymber is prepared to capitalize on this significant growth potential through new product innovations, growing global support infrastructure and increased manufacturing capacity."
For those who weren't able to attend, Cymer's headquarters is located in a scientific park on the west side of Rancho Bernardo, a community about 20 minutes north of San Diego on Hwy 15. Their neighbors include NCR, the first to locate there, and Sony, Digital, and HFS. Situated on a hillside, the campus is on several levels, with meandering sidewalks and stairways connecting the different buildings. Inside the lower building, the decor is white with blue trim, with highly polished floors so clean you could eat off them. The management was kind enough to offer tours after the formal meeting, and figuring this was a chance of a life time, I accepted. Windows along the interior hallway allowed us to view the clean rooms where lasers were being fabricated by automated work stations. Truth be told, about 70 - 80% (I didn't write down exact figure) of the assembly is done off site. Our guide indicated they'd like to raise that even higher. He also said the de-bugging cycle had improved from 35 days to 14.
I'm glad I attended and will definitely increase my position over the next couple months. One look at the growth projections beyond 2000, and it's clear this is one company you don't want to miss.
One serendipity. Cymer's new IR Director, Marie Burke, was just hired from Advanced Tissue in La Jolla. We recognized each other by name and since I'd enjoyed her professionalism when I owned Advanced, I'm delighted she's heading up Investor Relations at CYMI.
I spoke with both Robert Aiken and Bill Angus and feel confident this company will remain the leader in this sector of the industry.
Regards,
Pat |
