Varian Semiconductor Equipment Associates -- VSEA Message Board

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Technology Stocks : Varian Semiconductor Equipment Associates -- VSEA

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To: Duker who wrote (39)	5/17/1999 2:05:00 PM
From: Duker	Read Replies (2) of 1929

Here are my notes from the call: Sorry if they are sloppy ... I think I captured the information correctly, but I urge you to listen to the call yourselves @ Replay: 619-812-6440 #12345350. -- Gross Margin came in at 7.1% versus 35.7% y/y. -- The GM would have been 25% w/o the charges. -- The charges broke down this way: $11.6mm restructuring/one time and $5mm warranty and reserves ("balance sheet strengthening" ... saving a few dollars for a rainy day?). Attribution: 5.9mm Cost of Goods 1.6mm R&D 1.5mm G&A 2.6mm Special Line Item _____ $11.6mm ($.26/Share) Also: $5.0mm Inventory Reserves et. al. ($.11/Share) *So, Total Special* Charges Accounted for $.37/Share of the Loss. --Revenues were ~50% Product and ~50% Service (Wow!)** --High Energy Implant (acq. from Genus) is doing quite well. It is capturing a 40% market share in terms of new orders (up from 19% when it was acquired a few months ago) --SG&A would have been down if you excluded the special charge. --Over the next couple of quarters this line item will be up $1.0 to $1.5mm ... as a result of some systems work ... SAP strikes again!!! --The core SG&A run-rate is about $7mm per quarter (w/o a ton of seasonality ... except for the SAP work in the next one to two quarters). --Tax rate was 31.7% (expect it to be in the 30-35% range in the coming quarters ... further refinement TBA). --DSOs were at 91 days and INVx's were at 3x's. --Operating cash used during the quarter was $8mm and CapEx ran $2mm. --On the market for Ion Implanters: He quoted Dataquest numbers that project the market to grow at a 34% rate over the next several years (albeit from a very deep trough). --The Vista Single-Wafer Platform was lauded by Aurelio for its low CoO ... its indifference to 200mm or 300mm ... its ability to perform High-Tilt Implants ... its throughput (potential to reduce cycle time) ... its flexibility for "specials" without dummies ... and its overall goodness! --Aurelio also stressed the importance of having the full suite of products High Engergy/High Current/Mid Current because it allows the customer to really reduce training costs and parts/service costs ... --Aurelio stressed that the market was returning ... driven, for them, by Taiwan. --Bookings were in the range of 1.2 to 1.7 ( a bigger than a breadbox ... smaller than an implanter answer!) --Bookings mix was 2/3 Memory and 1/3 Logic ... expect that this will return to 50/50 with the help of Taiwan's logic buys. --Expect to see a sequential increase in bookings (N.B., This is a change from the previous guidance of "we do not have the visibility to see...") --Backlog sits at about 2Q (on what revenue assumptions, I do not know). --Lead times are b/w 3-6 months depending on the product. --Company has signed up some new customers ... outside the Memory area for the Genus High Energy product. --Aurelio on the competition: "... clear that we are gaining share." Still, very tough competition ... ETN & AMAT ... --High Energy is 10-20% of revenues. --Aurelio really stressed the Suite of Products: important from a customer standpoint with like Robotics/Software/GUI/... --Breakeven is about $70-75mm ... --Anticipate profitability at FY00 1Q.

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