Novellus Message Board - Msg: 8655058

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Technology Stocks : Novellus

NVLS 2.400

+2.1%

Jul 24 5:00 PM EST

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To: Dave Chanoux who wrote (2097)	4/1/1999 12:36:00 PM
From: Duker	Read Replies (1) of 3813

I've never been a fan of Lam Research, probably because it doesn't fit my investment objectives. What are your objectives? Lam comes with lots of debt. The last report I saw (3/98, not a typo, a year ago) listed $340 Million in debt or about $9 per share. The debt has come in part from acquisitions. The debt was not merger related ... OnTrak was bought for .83 shares of Lam Common in August of 1997. The "lots of debt" is a $310mm 5% Conv. Sub Note '02 with a conversion price of $87.77 per share. I would liken this instrument to some of the cheapest equity you can get. Total LTD and Other stood at $337.5 on 12/31/98. On the other side of the B/S there was $362.9mm of C&E (including the restricted cash (accessable if needed) which is arose from a synthetic lease deal that they did ... which makes infinite sense for any technology company versus owning your own buildings ...). So, net debt is ($25.4mm) or Net Cash ... which does not seem outrageous to me ... and assumes that you pay cash versus force conversion by '02. I would look a little harder at the company before dismissing it out-of-hand ... There is an intuitive fit ... and NVLS/LRCX makes sense from an economic and strategic sense. --Duker

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