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Technology Stocks : Cymer (CYMI) -- Ignore unavailable to you. Want to Upgrade?

To: Wolverine who wrote (22728)	7/27/1999 9:32:00 AM
From: Darryl Olson	Respond to of 25960

From the article I liked the last sentence: "As a result, Cymer guided analyst profit estimates up to the 4-to-8 cents range from the current consensus of 3 cents." Nice to see management guiding the analysts higher. However, market sentiment can be fickle and recent declines in the sector may hold us back for the short-term (my opinion only). I think we will see another run-up in two months, if not sooner, when investors start to focus on 3rd qtr earnings and future projections. Let's hope we encounter no more land mines.

To: Wolverine who wrote (22728)	7/27/1999 11:26:00 AM
From: Proud_Infidel	Respond to of 25960

Cymer: Bright Future for Laser Maker Cymer (Nasdaq:CYMI - news) makes laser systems for the semiconductor industry. The company just reported a net loss, but it is expected to return to profitability next quarter. In fact, on Monday the company affirmed those expectations with a bullish outlook based on its strong order backlog. That's the way it goes in the highly cyclical chip equipment business: the tough times are brutal but the survivors can enjoy huge profits when the cycle turns back up. Oh, and by the way, the cycle is turning back up. When we looked at Cymer last, it was mid-March and we wrote that "If there was any doubt that the semiconductor equipment industry has turned the corner, it was largely erased..." But even back then the market had been anticipating a cyclical upturn for months, driving a remarkable rebound in chip equipment stocks. So while Cymer's upbeat comments about a return to profitability this quarter are definitely good news for shareholders, investors have been anticipating this industry rebound for some time. Cymer closed Monday at $30, up from less than $6 last October. That kind of move makes some investors immediately think "the run is largely over, it's too late to look at this stock." But chip equipment stocks are notorious for the explosive upside moves, not to mention devastating declines. And earnings growth can be huge for these companies during the good times. Even before Cymer's upbeat comments backed up by a strong order backlog, analysts were forecasting earnings of $1.06 for next year. Those estimates might rise after Monday's report, and analysts are forecasting earnings growth of 32% on average over the next five years. Cymer's laser systems are used in the photolithography process of semiconductor manufacturing. Its excimer lasers are pushing chip making to the next level. These complex optical systems mix rare gases with halogen to produce pulses of short-wavelength light, and when they are built into chip-making equipment they enable semiconductor manufacturers to squeeze ever-tinier circuitry onto chips. Smaller, denser chips are faster and more cost-effective, but chipmakers had to wait until there was sufficient market demand to warrant the hefty investment in new equipment. Now we are seeing an aggressive industrywide transition from 0.35 micron chips to 0.25 micron and 0.18 micron over the next few years (a micron is a millionth of a meter, and these sizes refer to the line width or spacing between circuitry on a chip). This transition requires an unprecedented investment in semiconductor manufacturing equipment, and Cymer's excimer lasers are a critical component in the new deep ultraviolet (DUV) machines. The company commands an estimated 80% of the market for excimer lasers. Cymer figures their DUV systems can be used to bring line widths as low as 0.10 micron. There are potentially competing technologies being developed such as electronic beam and X-ray systems, but these appear to be much more expensive than DUV. Extreme ultraviolet (EUV) may still be a decade away from use in production, but Cymer is developing the technology for these next generation light source systems and has already tested a prototype. Cymer says it is taking a unique approach for its EUV technology: "Unlike other EUV approaches using complex high power laser-based technologies, our design converts electrical energy directly to EUV radiation by compressing and heating a small volume of lithium plasma..." A unique approach is great if it becomes the industry standard, securing Cymer's continued dominance of the lithography light source market. The risk, of course, is that one of the many other companies such as IBM (NYSE:IBM - news) develops a technology that wins out over Cymer's. That's a battle that won't be played out for many years, though. In the meantime, Cymer is at the center of the emerging generation in chip making, and investors just need to figure out what their willing to pay to own a piece of it. The company said that an order backlog of $59 million supported its expectations for third quarter shipments to increase 60-65% and revenues to increase 28-32% sequentially (versus the second quarter). As a result, Cymer guided analyst profit estimates up to the 4-to-8 cents range from the current consensus of 3 cents. fnews.yahoo.com