To all, here's an interesting bit of analysis re: Applied's purchases of OPAL and Orbit Instruments from The Motley Fool. This would appear to apply tangentially to PMT:
"APPLIED MATERIALS (NASDAQ: AMAT) added to the turmoil surrounding
semiconductor capital equipment companies this morning when it announced the purchase of OPAL INC. (NASDAQ: OPAL) and Orbot Instruments. Applied is scooping up Opal, a developer of CD-SEM technology, for $18.50 a share for a total price of $175 million, less the $32 million of cash and short-term investments that Opal currently has in the bank. Privately-held Orbot Instruments, a supplier of wafer and reticle inspection systems, is going for $110 million in
cash. A majority of the shareholders of both companies have consented to the merger, meaning that the deals are pretty much fait accompli. Applied anticipates taking a $50 to $60 million charge in its first quarter ending January, the equivalent of $0.27 to $0.32 in earnings per share (EPS).
This purchase represents Applied's entry into the booming metrology and inspection equipment market, one currently dominated by KLA INSTRUMENTS (NASDAQ: KLAC). CD-SEMs are scanning electron microscopes (SEMs) that measure the critical dimensions (CDs) of chips at
various points in the manufacturing process. Orbot Systems competes directly with KLA, making automated optical inspection systems designed to enhance yields and ensuring that the reticles (or
masks) used to pattern the semiconductors remain intact. KLA Instruments is down $2 1/8 to $36 3/8 today, possibly a direct result of Applied's move into its space. ASYST TECHNOLOGIES (NASDAQ: ASYT), a leading developer of semiconductor fab automation equipment, rose $1
1/2 to $20 1/2 today, possibly on speculation that it might become the subject of a bid by Applied or another company as well.
The bottom of swings in the semiconductor equipment cycle is normally marked by a burst of mergers. Managements who can see the end of a downturn look at the valuations accorded many potential strategic partners and begin to spend the hoard of cash they have been holding tight for many quarters. Applied's move this morning represents the first such purchase since the semiconductor industry went sour back in late 1995. Applied's purchase of Opal for 2.3 times trailing sales should help give investors a concrete sense of how to price smaller, more technologically advanced semiconductor equipment producers during their cyclical lows. Applied's willingness to enter into a merger confirms that management believes it has hit the bottom of the
cycle. Whether or not the bottom has been reached has yet to be determined, but the confidence exhibited by Applied's management should help to sustain the recent price gains in many semiconductor equipment shares." |
