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Technology Stocks : Amkor Technology Inc (AMKR) -- Ignore unavailable to you. Want to Upgrade?

To: Pete who wrote (544)	2/4/2000 12:17:00 PM
From: Artslaw	Read Replies (2) \| Respond to of 1056

Alert: Prudential Ups Amkor Technology 12-mos. Target to $55 From $45 {headline only} biz.yahoo.com

To: Pete who wrote (544)	2/4/2000 1:37:00 PM
From: tech101	Respond to of 1056

Chipmaker Thinks Small And Fast For Profits Date :02/04/2000 Author :Vance Cariaga Copyright :Investor?s Business Daily Title :AMKOR TECHNOLOGY INC. [/RULEABOVE]/ West Chester, Pennsylvania West Chester, Pennsylvania; NA bottom In the microchip industry, size matters. The smaller the chip, the faster the product, the bigger the demand. That's why officials at Amkor Technology Inc. spend their time thinking small. Amkor assembles and packages the semiconductor devices that hold microchips and silicon wafers. The demand for smaller, faster microchips has created added pressure to produce smaller packages to house them. It's an expensive job; one that requires considerable investment in research, development and manufacturing. But the potential payoff is huge. Internet and telecommunications companies spend billions of dollars a year on semiconductor assembly, packaging and testing services. The key for companies such as Amkor is to stay one step ahead of the competition. "The market is shifting to high-performance chips that run very fast and very hot, with very small geometries," said John Boruch, Amkor's president and chief operating officer. "We have to come up with packages that handle high-speed electronic signals and get rid of the heat, so you're talking about the leading edge of the technology. We put a lot of money into R&D, but it's worth it because of the market potential." Three Purchases Amkor's investment will soon get even bigger. The company in November announced plans to spend as much as $1.4 billion to acquire three packaging and testing plants from Seoul, South Korea-based Anam Semiconductor Inc. About $600 million will go toward the purchase of newly issued Anam shares. The remaining $800 million will cover the cost of the plants themselves. Anam raised its asking price in January after a due diligence study found that the plants were undervalued in Amkor's original offer. Negotiations are still under way. The deal is expected to close this quarter. Reactions to the announcement have varied. Standard & Poor's placed Amkor on CreditWatch with negative implications. Moody's put the company under review for possible downgrade. But industry insiders say the deal, while expensive, makes sense. The company already subcontracts work at the three plants and accounts for almost all of the output. Buying them will give Amkor more control over production. "It's a good move from a pure profit and loss standpoint," said Brett Hodess of Banc of America Securities. "Right now, Amkor subcontracts with Anam and they're only getting about a 10% to 11% gross margin. When Amkor owns the plants they'll be able to drive those gross margins to the 22% to 24% range. So although the price seems high, it's looks like it will be accretive to those numbers." Plus, Hodess adds, having complete control will allow them to expand a little more, further boosting revenue. Double-Digit Climbs The company's third-quarter revenue hit $501.8 million, 30% higher than the same period in 1998. Net income for the quarter rose 25% to $26.1 million. Earnings climbed 24% to 21 cents a share. Analysts expect earnings to rise 6% to 70 cents a share in 1999 and another 59% to $1.11 in 2000, finally reaching $1.54 in 2001, First Call says. The company sells as AMKR near 40. The biggest challenge now may be figuring out where Amkor should put its primary focus. The company counts Sun Microsystems Inc. and Cisco Systems Inc. among its clients. Its packaging and testing products serve a number of fast-growing markets: Internet providers, telecoms and high-tech toymakers. Determining which holds the most sales potential isn't easy. "They're all so new that it's not easy putting a dollar figure on them," Boruch said. "The Internet sector represents hundreds of millions of dollars a year to us, and it's just beginning. In the consumer area you have a strong, emerging market for vision package chips used in phones, computers, toys. Telecommunications is exploding at $1 billion or more." Keeping Hand In Strategies Not a bad problem to have. That is, figuring out which sector holds the most growth potential. Amkor's strategy so far is to keep a hand in each. Doing so successfully means having the adequate staff, resources and facilities in place to continually raise the technology bar. "Amkor not only provides the broadest spectrum of packing services, they've made the R&D investments to stay at the leading edge of the market," said Michael O'Brien, an analyst with SoundView Technology Group. "That's allowed them to provide the right products at the right time, which is a big key to their success." Just don't expect them to rest on their laurels. "We work very closely with a lot of these companies, and that allows us to play in the game," Boruch said. "But to play well you have to have excellent service and technology and competitive prices. You can't afford to let up." investors.com