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Technology Stocks : Teradyne -- Ignore unavailable to you. Want to Upgrade?

To: semi2000 who wrote (1126)	10/5/2000 9:54:14 PM
From: Andras	Read Replies (1) \| Respond to of 1184

On balance ratings have not changed. 9 strong buys and 11 moderate buys for the last two months. biz.yahoo.com With the decline in price and good results on Oct. 19th I anticipate some upgrades. Happy investing, andras

To: semi2000 who wrote (1126)	10/7/2000 10:42:37 PM
From: Maverick	Respond to of 1184

CSFB;What Drives H2 Orders Higher? LOTS!! Excerpts fr CSFB 7/19 Q2's Bookings Pause Apt To Rebound In Q3 And Q4Summary Q2's Dip In Bookings Not A Red Flag - Unsustainably high Q1 Asian orders not repeated in Q2. Sequential growth on tap prospectively for Q3 and Q4. Driving The Top Line $100MM/Quarter - Q2's $111MM sequential revenue gain was achieved despite continued components shortages. With lead times at 5½ months and sequential order growth on tap, look for comparable rates of sequential revenue growth through year end. Slowing Margin Gains In H2 - Q2's lower-margined bookings mix is apt to cap margin expansion to perhaps 20-40 basis points per quarter, as opposed to Q2's nearly two-point gain. Teradyne is the largest North American supplier of semiconductor test gear. Investment Summary Teradyne is rated BUY. Q2's nearly $200MM sequential order decline may be viewed by some as disappointing, and we would be aggressive buyers on any weakness. With front-end orders booming, and likely to grow into 2001, test demand - which lags that of the front-end by 1-2 quarters - is apt to post a resurgence in H2, and prospectively 2001. Upside catalysts are prospects for rebounding Q3 orders, and prospective new wins in Telecom test, again a Q3event. Pause In Asia Clips Semi Test Bookings Q2 bookings of $826MM fell sequentially by $198MM below Q1's record pace, but were a solid 21% above the Q4:99 pace. The downtick in bookings is primarily attributable to a $187MM sequential decline in SE Asian orders. Q1's tally was inflated by $120MM from large awards booked in the last 3 days of the quarter. Moved into Q2, that $120MM was the difference between sequentially up and down Q2 orders. By product line, Mixed Signal orders, which surged in Q1 to nearly $500MM, fell by 60% in Q2, offset by sharply higher Memory orders and solid double digit Logic growth. Since TER does not manage its reported bookings, lumpiness is to be expected, as was the case in Q3:99, when bookings fell 14% sequentially. As in prior quarters, Connection Systems orders surged again, paced by vigorous telecom and storage end-markets. What Drives H2 Orders Higher? LOTS!! Off-line comments from management suggest a strong Q3 and Q4. Key drivers include: 1) a rebound in SE Asia (may add $100MM in Q3 alone) 2) lift in Japan (front-end spending is surging), TER's logic penetration is high 3) a prospective large Q4 flash award from the same "new" logic customers, whose H2 logic-related orders are apt to top those of H1, and 4) a likely $30-50MM DSL test award from a European customer. $1+BB in Q3 awards cannot be ruled out (Asia and TCS add about $125MM over Q2) with sequential growth likely in Q4. Steady Production Ramp Underway At $1.4BB, TER's backlog is between 5-6 months' sales. If orders top $1BB in Q3, and revenues growth by $100MM, lead times will remain unchanged at 5½ months next quarter. Management's plans are to continue to ramp shipments by $80-100MM per quarter through Q4. We have modeled in slower sequential revenue growth next year, but, importantly, growth through Q4:01. Full year sales are projected to grow by 80%, to $3.2BB, in 2000, followed by 36% growth next year, to nearly $4.4BB. Driving this year's top line is a projected 130% growth in Mixed Signal test (Telecom is booming) and nearly 50% growth in Connection Systems billings, formerly a 15% grower. Focus On Costs An Offset To Tougher H2 Mix Q2 benefited from a rich mix (70% of revenues were Semi Test), led by the highest margined major product line - Mixed Signal test. Variable gross margins again topped 50% (51.5%) in Q2, while R&D growth was well shy of sales, allowing Q2 margins to expand by nearly 2 percentage points, to a record 25.1%. Gains over the next two quarters will be tougher to come by. Firstly, order growth in Q2 was fastest for TER's two lowest-margined product lines - Memory Test and Connection Systems. Secondly, R&D spending as a percentage of sales is not likely to fall much below Q2's 9.7%, while numerous new product launches will drive SG&A. Since Q3 and Q4's drivers to orders are more akin to those of Q1:00, TER's revenue mix is apt to richen again in H1:01, and, with it, resumption in margin prospects.