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

To: Proud_Infidel who wrote (23374)	10/27/1999 1:47:00 PM
From: Robert Douglas	Respond to of 25960

I would love to hear the thread's comments on two paragraphs in Merrill Lynch's report from yesterday. Advanced 2kHz Laser Business Growing Rapidly During the third quarter 20% of system sales came from the company's advanced 2kHz laser, the ELS 6000, this was up sequentially from less than 5% in the second quarter. We believe the industry's acceptance of this new technology will continue to accelerate through next year. By the middle of next year an estimated 80% of system revenues will come from this 2kHz product. The markets accelerating adoption of enabling technology will continue to give CYMI, the technology and experience leader, and an advantage over its competitors that remain a generation behind the curve. CYMI's largest competitor Komatsu has made some inroads into the Japanese domestic market with its I kHz technology but the industry's shift to 2kHz technology should minimize much of Komatsu recent market share gains. How much of a lead do you think this gives them? The report also postulates that as Komatsu tries to shift to a production environment they will have problems. High Utilization Rates Enables CYMI to Capitalize on Its Large Installed Base During the last few quarters the overall DUV lithography utilization rates have increased to essentially 100%. This increased usage has correspondingly increased the demand for spares, services and upgrade kits. Since CYMI owns more than 90% of the installed base the company receives virtually all of this incremental business. During the quarter 37% of revenues were non-system orders. Unlike the traditional equipment company CYMI receives margins on its non-system business that are comparable to its system margins. We believe non-system revenues will remain in excess of 25% going forward and continue to be an important part of the company's business. Are "traditional equipment companies" getting non-system margins that are less than system margins? I thought that parts and services always carried nice fat profit margins. Also, is 37% sustainable given the replacement and service cycles in place?