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Technology Stocks : Cymer (CYMI)
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To: Zeev Hed who wrote (19118)8/26/1998 10:48:00 PM
From: Czechsinthemail  Read Replies (2) of 25960
 
CYMI has remained relatively strong while the semi equip sector looked very weak. Many potential buyers come out of the closet as soon as the stock gets around 15. Though there is always the possibility that CYMI may trade below its 52 week low, the history of strong support in the 14.5 to 15 area seems to be keeping the stock from dropping much.

With the strong predictability of a major level of DUV laser business that is likely to be a high priority in chipmaker capital spending plans, the major uncertainty at this point seems to be whether DUV equipment companies like Nikon, Canon and ASMLF have enough lasers in their inventory to ride out a prolonged dry spell on new DUV orders. If they do, CYMI's next quarter or two may prove disappointing. But CYMI's ability to fund R&D and expansion of its production facilities while maintaining profitability has impressed me. I think they have borrowed a page from the AMAT book around increasing their relative market strength by making key investments during the down cycle so that they emerge stronger than their competitors. For all the references to Lambda Physik and Komatsu, there really hasn't been much evidence of their lasers showing up in a big way. It's possible that a delayed semi recovery might give them enough time to build a more viable competitive position in time to bring lasers to market when the big buying spree occurs. But so far there seems to be clearer evidence of the progress on CYMI's next generation lasers than there is of the production of competitors' early generation lasers.

Though I'm sorry for all those who are tossing their shares after riding the price down, their decision to do so sounds very much like a bottom to me.

good luck,
Baird
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