No solid evidence that it is losing direct market share with IPEC with the exception of the Montgomery Securities report (which isn't evidence but impressions by the analyst).
Perhaps I should have been clearer in stating that the problem is with AMAT and to a lesser degree IPEC in their partnership arrangement with NVLS.
From the Montgomery report:
1. Reduce Rating From BUY to HOLD as SpeedFam Loses CMP Market Share. We attended SpeedFam's presentation at the AEA conference this week. Based on our checks with other CMP suppliers and end-users, we believe SpeedFam has lost market share to Applied Materials, Ebara and IPEC. Applied Materials has made tremendous strides in the CMP-Mirra product this year booked $130 million of CMP systems in the first half of AMAT's fiscal 1998. We believe, given the strong bookings momentum, bookings could exceed $130 million of CMP tools in their second half of fiscal 1998. Applied has focused its efforts on oxide CMP applications, taking significant share from IPEC and SFAM. IPEC, has conceded lost market share to Applied on oxide CMP applications but maintains an edge on metal CMP applications as Applied has paid less attention in that arena. The consequence is that SpeedFam has lost ground on both types of CMP applications this year.
2. Lost Market Share Attributed to Focus on 300 mm Product Activity. Earlier in the year, as equipment suppliers foresaw the indefinite postponement of 300mm technology implementation, OEM providers immediately shutdown or severely curtailed their 300mm program. SpeedFam however continued its 300mm activities through most of 1998 diverting its focus from current 200mm CMP applications. As a result, SpeedFam lost momentum on 200mm. Recently, SpeedFam elected a new president and CEO, Richard Faubert, a former senior executive from Tektronix to refocus the business. Makoto Kouzuma has moved to the role of vice-chairman with Jim Farley remaining as chairman.
3. Maintaining Estimates However We Believe Earnings Could Weaken Further. SpeedFam will report its fourth (November) quarter fiscal 1998 results in late December. Although we are maintaining our estimates based on the tone at AEA, we believe estimates could be reduced again following SpeedFam's earnings release. It is unlikely the company can resize its business quickly enough to manage breakeven levels by mid-1999. Losses could extend through most of next year.
4. Disk Drive Market is Showing Signs of Improvement But Wafer Polishing Outlook Remains Dismal. There appears to be signs of increasing interest in SFAM's CMP disk media and thin film head (TFH) substrate polishers. SpeedFam noted that the market outlook could start to improve with TFH orders beginning in late fiscal 1999. However, silicon wafer manufacturers are still dealing with excess capacity with virtually no silicon wafer polisher orders expected for many quarters out. |
