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Technology Stocks : Veeco Instruments-Who? -- Ignore unavailable to you. Want to Upgrade?

To: All Mtn Ski who wrote (2240)	7/8/1999 3:35:00 PM
From: A. Edwards	Respond to of 3069

Customer's problems were cited for the downgrade..... Merrill Lynch July 8, 1999 Mark F. FitzGerald, Vice President Thomas R. Diffely, Industry Analyst Veeco Instruments Disc Drive Problems Trickle Down Long Term BUY Reason for Report: Cutting EPS Estimates Investment Highlights: · We are lowering our intermediate term opinion from a Buy to an Accumulate. We are cutting both our EPS estimate for FY'99 and FY'00. New Old FY'99 Revenues(M) $229 $245 EPS $1.40 $1.55 FY'00 Revenues(M) $249 $302 EPS $1.75 $2.11 · We think the decline in the stock over the last several months discounts much of the bad news. But its customer's problems are serious enough that a recovery will likely be protracted. Our 12 months objective price is $40 assuming a 23 multiple on FY'00 earnings. Fundamental Highlights: · The company's strategy of focusing on the data storage industry (50% of sales) will make this one of the more volatile stocks in the equipment sector. · The pricing pressures in disc drives and the financial problems reported by Veeco's customers give us little confidence that the ramp in spending on GMR head technology will continue at the current pace.