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Technology Stocks : Novellus
NVLS 2.400+2.1%Jul 24 5:00 PM EST
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To: Skeeter Bug who wrote (1991)3/5/1999 3:02:00 PM
From: Duker  Read Replies (1) of 3813
 
<<anybody put 2 and 2 together and asdk themselves why this company needs so much money immediately after the biggest semi equipment boom in the history of the world?
can anybody say - non cash flow business?>>

Skeeter,

I would be careful on this one. The numbers I am looking at do not support your position. Sure, in 1997 they had negative free cash flow of $13.5mm (Net Income + D&A +/- changes in WC - CapEx). That was a very sloppy year due to the Varian acquisition. In 1996, they generated almost $32mm in FCF ... in 1995, the figure was almost $40mm ... not terrible numbers for a growing company that spends a reasonable amount on R&D&E.

I have no vested interest here. I do not own NVLS, nor do I think it is particularly cheap. One of the reasons that it is not particularly cheap is that it has a pretty great business model. The are very good manufacturers (AMAT wishes they could get Austin to work like NVLS) ... and cash generation is pretty damn good. Just my opinion. N.B., the 1998 numbers (I have no 1998 10-k) are probably not great ... but I would argue that 1998 was one of the worst years in the history of the business. Moreover, I do not have the 10 year history. Maybe those numbers suck (though that is not my recollection).

--Duker
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