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Technology Stocks : CFM Technologies Inc. (CFMT) -- Ignore unavailable to you. Want to Upgrade?

To: SemiBull who wrote (603)	12/14/1999 11:55:00 PM
From: Chris Nevil	Respond to of 721

Thanks much, Semi Bull. Appreciate the conference call update and your views.

To: SemiBull who wrote (603)	12/15/1999 7:03:00 AM
From: Duker	Read Replies (1) \| Respond to of 721

SemiBull, I was not expecting much. Please read post #587. As far as my thoughts: I am disappointed that they were not able to build backlog. I am disappointed that $16-17mm quarterly run-rate no longer appears to be break-even -- as our old friend litigation expense will increase enough this summer to push the break-even to some revenue level that will probably correspond to the peak in the cycle. I was reasonably disappointed in their comments about Prism. It sounds like it has not been that popular a choice in its current configuration and people seem to be waiting for the reconfigured model (need to follow up on this point with the co). If ever there were a time to sit back and reflect on why CFM should be a stand-alone entity, this would be the time. Lam/OnTrak or AMAT (or some other monied player) could add to their cleaning portfolio at a reasonable price. This would also serve CFMT well in the courtroom versus DNS and FSII ? certainly the latter would be a bit put-off. What is that reasonable price? Let's assume that the $14mm facility is worth about $6mm. The acquirer moves the plant and facilities to the Left Coast and sells the shiny new factory to an internet start-up in Exton. There is about $22.5mm in C&E (net LTD) on the balance sheet. The AR basically cover your Current Liabilities, and the $17mm in inventory supports my next calculations (supporting a theoretically growing top line). Adding these figures up (ex-INV) I get $28.5mm dollars. The company will lose another $2.5 million for the next two quarters after-tax(?). By mid-year, they will ?only? be losing about $2.0mm after-tax (big guess with litigation ramp?) per quarter. So, let?s just call it about $9mm in loses for this fiscal year. Netting the ~$4mm or so from the STEAG settlement (big estimate for the ?big win?), that knocks off about five million from the valuation. So far, we are at $17.5mm. There are obviously some NOLs that should be factored-in, but I do not have that figure. The market opportunity and the technology are worth something. Let?s assume that the peak revenue number for CFMT is about $80mm. Someone else could earn (at least) 13.5% operating margins from the business. We will cap that at a very modest 12.5% -- $86.4mm. The whole ball of wax is then worth about $103.9mm. Assume there are 8.3mm shares outstanding including vesting options (I am guessing here). Using my assumptions, $12.50/per share is a ?reasonable price for this business.? Which is to say, in the absence of a sale, I should have been a seller at $11 ? as it is about 90% of the reasonable price for the company (a fine public market valuation). I assume that after today, I will have wished I had sold all my shares there. --Duker