Cymer Q3 1998 Conference Call, Part 3 of 3 - Q & A
Elliot Rogers, Credit Suisse First Boston
Rogers: When you look at the backlog, obviously there is a big burn rate in the backlog. Were there any cancellations in there. And secondly, when you're looking at the quarter uptick, on a net or gross bookings basis, are you looking at going to book-to-bill over parity, and would you constitute this as long-lead technology buys, or long-lead capacity buys?
Angus: No cancellations. I don't know if we will achieve parity. I would guess not at this point. But, we feel the order picture will be stronger than it was, but it was awfully weak, obviously in Q3. And would repeat that last part of the question?
Wu: When you look at the forthcoming orders and obviously the destination for these lasers as far as which tools they're going into and what's the ultimate destination, would you characterize the tools and the destination as being related to technology buys or capacity buys? For example, a capacity buy could include Micron retooling the TI facilities, or a technology buy being adding, going from .22 to .8 micron.
Angus: We view it as the effects of the competition among the chipmakers driving their capacity to implement their strategies in this coming year.
Wu: Thank you.
Michael Murphy, Murphy Investment Management
Murphy: Looking at the most recent industry data where the book-to-bill looks like it's flattened out at a really low level. It looked like there might be the beginnings of an uptick in backend equipment, and I was wondering if historically there's known lag time between when backend picks up and when frontend or lithography might pickup.
Akins: I think it's been proposed by some in the industry that a pickup in orders for backend equipment can be an early indicator, a leading indicator, for a pickup in the frontend. By the same token, just general knowledge of the industry shows that it's exactly the opposite in that they expect to see increases in orders for the very frontend equipment to be the early indicator for the industry. So on that particular one, I think you can either go with the general wisdom or if you're with those who think that they have seen a backend trend indicating a growth in the marketplace. At this point in time, it's hard for us to say. We still certainly would contend that a certain number of next-generation technologies like DUV lithography could be looked at as an early indicator for the whole industry.
Murphy: Ok. Thanks.
Jay Deana, Morgan Stanley (followup question)
Deana: Hi Bill. What was product sales as a percentage of the total?
Angus: Product sales as total percentage of revenue? 99.8%. Remember, products are systems and spares in our terminology.
Deana: Right. I guess what I'm looking for is your service and spares revenues as a percentage of the total.
Angus: I don't think that we've discussed that on this conference call.
Deana: Ok. And in the earlier part of your call, did you indicate the percentage of decline in unit shipments for the quarter, or (gap in audio, so missed the last part).
Angus: Repeat that again Jay?
Deana: Did you indicate earlier n the call the percentage decline in your unit shipments in the quarter?
Angus: Yeah. The unit shipment for lithography decreased 25% from Q2.
Deana: Was that laser units from Cymer or was that lithography in…
Angus: Laser units from Cymer to our customers.
Deana: Ok. Great. Ok, and in terms of the average selling price, for the 4th quarter given your shift in your mix, do you see the ASP, you know, what kind of increase relative to the 3rd quarter?
Angus: Oh boy. Just a slight increase, really, Jay.
Deana: Ok. Thanks.
Gene Paine, XG Cowan (not sure about any part of this. Hard to tell what was said.)
Paine: Question of classification, actually. You said earlier in your prepared comments, or actually in answer to another question, that your lithography unit shipments were down 25% versus Q2, but that your installation rate was down 40%. I'm not quite sure that I understand that, I mean…
Angus: Look, install rate is at the chipmakers, whereas the shipment rate is to the lithography tool manufacturers, the integrators, if you will, of our laser into the stepper or scanner.
Paine: Excellent, that clarifies it. Thank you.
Mark Fitzgerald, Merrill Lynch
Fitzgerald: With the mix shifting toward the 5010 and the 6000 here, are these sales that's getting originally, just people qualifying the tool?
Akins: That certainly can be said of the 6000. And of course I announced that we've just shipped the first unit, but we still expect that the first several of the 6000 series that we ship will be used for evaluation and integration into the new higher-performance scanners and steppers. The 5010 has already gone through that process in earlier quarters, and we've been shipping that since the first quarter of the year. We've already gone through that, so that unit is now considered a production laser, and of course it (unintelliglble) production laser for scanners. It's gone through its introductory phase, if you will, already.
Fitzgerald: And when you say the 5010's through the production, that's at the device manufacturer and not the OEM?
Akins: Principally at the OEM. We shipped the first unit in the middle of March this year, and again there's the normal testing, evaluation , and the integration process. So they haven't found their way to the chipmakers yet, but will soon.
Fitzgerald: Will the chipmakers have to go through their own qualification before you'd expect to see a production ramp at the device manufacturer for the 5010?
Akins: Yes, we believe so, so as has happened with any previous model, we would look for our direct customers to ship a smaller number of those systems to multiple chipmakers for evaluation, and then to follow that up with larger orders. Those first systems would be used for not only familiarization with the new laser, but also for process qualification, to ensure that there have been no tweaks to the actual exposure process itself.
Fitzgerald: And what's the typical length of time for a device manufacturer to qualify a stepper?
Akins: About 3 months.
Fitzgerald: Thanks.
David Wu (followup)
Wu: I have one question about laser sales. It looks like the growing market share for the 5010 is not enough to explain the current decline in units, and it looks like the share of 5010s are growing because the 5000s are going down more sharply. Is that a correct statement? And the second question is it's about upgrades of 5000 lasers to 5010 level. Do you see any demand for this right now?
Akins: On your first question, you're absolutely right (unintelligible) The shift from the 5000 series is (unintelligible), even though it's occurring at a faster rate than anticipated, is not fast enough to make up for the total reduction in demand now. So, I think I agree with your assessment in that it was a principal driving force that the 5000 series going down, 5010s going up. But in any case, because of the falloff in demand at the chipmakers, and as we discussed earlier, the fewer number of installs that are occcurring at chipmakers, the volume of the business is falling off faster than the ASP rise. The conversion of the 5000 to 5010, as I mentioned earlier, we have some limitations on what we can say there, because we are in discussions with direct customers and chipmakers. And I think that the first of such upgrades may occur early in 1999. Early to mid 1999.
Wu: Thank you Bob.
Rick Santini, Trimark.
Santini: There's been a bit of buzz lately about taking the mercury technology down to .18, or I guess some of the stepper manufacturers would like to do that. Any comments on that?
Akins: I think that again, in a laboratory it's possible to do anything, but certainly here is strongly that that is not the kind of step you can take in production. And there has been some talk even earlier in the year or last year of I-line doing 0.22, .021, 0.20, and that has not proven to be a production reality. So, the most capable tool that could use a mercury bulb to get small dimensions would be the SVGL Micrascan tool, and even it would not be using the mercury I-line. It would use the mercury 250 nanometer line. But if you talk to SVGL, they'll confirm with you, as they have in some press release recently, that their 0.18 micron tool set will be powered by and excimer laser. So, I think that it's not at the top of the list of our cards for competitive technologies.
Santini: Thanks a lot.
Jim Heeder, Stark Investments
Heeder: I believe you mentioned your cash flow from operations a little bit earlier. Would you please repeat that?
Angus: Operations generated 21.4 million.
Heeder: Is year-to-date or for the quarter?
Angus: For the quarter. |
