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To: Donald Wennerstrom who wrote (1099)	9/28/2000 4:09:55 PM
From: Maverick	Read Replies (1) \| Respond to of 1184

AMAT to expand focus:will acquire other cos. Could it be TER ? Posted at 9:28 p.m. PDT Wednesday, September 27, 2000 mercurycenter.com Applied Materials to expand focus BY THERESE POLETTI Mercury News Applied Materials Inc., the world's largest maker of semiconductor equipment, is quietly reorganizing its internal structure to cut costs and focus on new business areas as the company looks to expand beyond its core business of making equipment used to manufacture the silicon wafers that are the basis of computer chips. In an internal memo distributed to employees earlier this month, the Santa Clara-based company set a goal of doubling this year's $10 billion in expected sales within five years. A key part of achieving that goal is to greatly expand into new business areas, especially in two areas of semiconductor equipment: photomasks, used to transfer chip design patterns onto silicon wafers and machines to make liquid crystal display panels. ``They are so dominant in some of their existing areas, they need to expand to maintain their historical growth patterns,'' said Dan Hutcheson, president of VLSI Research, a market research firm that tracks the equipment industry. Applied Materials has made small acquisitions in both the new business sectors, but so far they are a very small part of Applied's overall business. The mask business, which Applied formed out of its purchase earlier this year of Etec Systems Inc., has estimated annual sales of $200 million to $400 million. The flat panel display focus stems from the company's 1993 joint venture with Komatsu Ltd. of Japan. A year ago, Applied announced a deal to buy Komatsu's half. Eric Ross, an analyst at Thomas Weisel and Partners, estimates that the flat panel business has annual revenues of no more than $200 million a year. The LCD business could grow with the boom in devices requiring flat panel displays, such as personal computers, digital TVs and handheld devices. In the memo, Applied management also said it plans a big emphasis on e-business in its existing business operations to speed up communications with its customers and its suppliers to handle personnel tasks like training. Jim Morgan, Applied's chairman and chief executive, is on the board of networking giant Cisco Systems Inc., which has been one of the early pioneers in cutting costs by using the Internet to automating sales and common administrative tasks. ``We are always looking at new areas to serve customers,'' said Jeff Lettes, an Applied spokesman, who confirmed the contents of the memo. ``It's taking the best practices of many companies and applying what is unique to Applied Materials. It's coming up with what works best for our customers.'' Lettes also said that Applied could focus on other new areas of growth, but he declined to be more specific, nor would he say if the company plans to acquire more businesses. As part of the reorganization, Applied also reshuffled many mid-level managers and set up a process to decentralize decision making. Applied said it will focus on new business sectors without decreasing the focus on its core business. The memo also talked about the need to provide a new generation of Applied leaders with opportunities to manage various market segments. ``AMAT needs an environment where entrepreneurial business leadership can continue to flourish,'' the memo said.