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Technology Stocks : Varian Semiconductor Equipment Associates -- VSEA -- Ignore unavailable to you. Want to Upgrade?

To: Duker who wrote (111)	8/16/1999 6:35:00 AM
From: Duker	Read Replies (1) \| Respond to of 1929

You do the math: Total Ion Implant Market in 2002 (Dataquest and VSEA estimate): $2 billion VSEA's goal is to have 40%+ market share ... they currently estimate that they have 40% of the current bookings ... and they have only shipped one VIIsta system (their new, incredibly impressive, platform). Their annual Break-Even revenue base is BELOW $300mm. From the last call, we can assume that we get there very soon and that the number is a solid amount below $300mm ... depending on the headcount ramp and the R&D. The marginal contribution above that is 30% of Sales -- to EBIT. For each dollar of revenue above the break-even number ... 30 cents goes to EBIT. I would argue that this is probably conservative ... given that the VIIsta product line garners a price premium of $1mm per machine over the machines they replace ... this is a value-based premium, not a cost-based premium. In 1996, the company had 42% GM and earned $2.32 on $499mm in revenues ... it was a different company then ... I would argue for a higher GM target ... and higher revenues at the next peak (40%+ on $2 billion in 2002 is closer to $800mm by my calculations ... but, who knows if we get there) ... Just some numbers to think about. Whether they ever come to fruition is too difficult to discern. But, these are the types of figures being put out there. --Duker