Speedfam [SFAM] Lovers Unite ! Message Board

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Technology Stocks : Speedfam [SFAM] Lovers Unite !

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To: Justa Werkenstiff who wrote (3363)	4/24/1999 10:00:00 AM
From: Mr. Sam	Read Replies (1) of 3736

<<Given your assessment of AMAT's order dominance this year, why do you like SFAM more? I read your excellent comparison of AMAT to SFAM but would like your thoughts on putting it all together. When and where does SFAM begin to perform in getting its fair share of orders and why in your opinion? >> CMP is going to have a much higher growth rate than semiconductor equipment in general coming out of this downturn, so I want to be disproportionately invested in the CMP sector. SFAM is the purest play in the sector. I'm not aware of any other public company for which CMP accounts for more than 25% of revenues. (One company that might come close is Lam (LRCX). Their acquisition of On-Trak gives them the dominant post-CMP scrub tool, and one ships with about 85% of the polishers that are sold by any polisher company. Additionally, they are starting to sell their Teres polisher--no revenue from it yet--so that will add to their potential as a CMP segment play in the future. Lam expects to return to profitability in the current quarter with about a $0.10 profit according to their conference call this week.) Additionally, SpeedFam-IPEC is a very cheap stock, and it has a lot of its problems priced into the stock at this point. Their biggest technical problems are solvable, and I expect them to get fixed in time to win the orders for the next big wave of new fab construction announcements. The disruption created by the merger is almost over, and the benefits will start to kick in later this year. I expect SFAM to hold on to 20%-25% or so of the market (new tool orders) and to increase that next year. The segment should have a 60% or so growth rate for a few years coming out of the downturn. A modest share of such a rapidly growing market would be just fine. Were the share to drop below 20%, I'd worry about their ability to maintain the critical mass needed to continue to invest in the R&D at an adequate rate to keep up with AMAT and the other competitors. Unless they stay below 20% of the market for a couple of quarters, however, I'll continue to bet that they'll be able to take back enough of the bananas from the Gorilla to make SpeedFam-IPEC an excellent investment. Profitable investing, Mr. Sam

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