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To: SirRealist who wrote (56314)	6/6/2002 7:13:09 PM
From: SirRealist	Respond to of 208838

Pressure coming from here? .... (see inside) Kinetics gearing up for chip-equipment IPO -sources THURSDAY, JUNE 06, 2002 5:47 PM - Reuters U.S. Company News By Eric Auchard NEW YORK, June 6 (Reuters) - Kinetics Group is set to float its semiconductor process control unit in an offering designed to raise about $300 million, which would mark the first of a new crop of chipmakers to sell shares to the public as the industry emerges from a steep downturn, sources familiar with the plan said on Thursday. The company is planning to sell stock in the unit worth roughly $300 million in an initial public offering, which could give the unit a market capitalization of between $1 billion and $1.3 billion, according to the sources, who asked not to be named. Celerity, as the spinoff will be newly named, generated roughly $200 million in sales during 2001. Kinetics Group, a closely held Silicon Valley firm with roots in the high-tech plumbing business, could file to hold the stock offering as early as Friday, said sources.. The IPO, if completed, would mark the first new offering of a semiconductor equipment company in 2002 and represent one of the few high-technology companies -- other than those with military ties -- to go public so far this year. The company declined to comment on its financial plans. "As a private company, it's our policy not to release any information with respect to our financing," Ray Pfeifer, investor relations director for Kinetics, told Reuters. "We don't have any announcements to make at this time," he added. Bankers and analysts associated with underwriters of the expected public offering also declined to comment. The sources said that Kinetics plans to spin off its Fluid Delivery Systems unit. One of Kinetics' two major businesses, the unit supplies the valves, filters and regulators that allow for the precision control of chemicals and gas vapors used to etch advanced computer chips. The Fluid Delivery Systems unit maintains "clean room" manufacturing facilities on behalf of the leading makers of semiconductor equipment, including top chip equipment supplier Applied Materials Inc. (AMAT) , Kinetics' biggest customer. "They are essentially a plumbing business," said semiconductor manufacturing analyst Bob Johnson of Gartner Dataquest in San Jose. "But then the high-tech plumbing business can be a great business to be in," he said. Gerard Klauer Mattison semiconductor analyst Jack Geraghty said that such an IPO would be good timing for investors. Market valuations now have hit the bottom of a cyclical trough, leaving room for strong gains in the coming years, according to Geraghty. "The company would be getting a cheap valuation in a sense, but would also be in a great position ahead of the next upturn," he said. Wall Street and industry analysts say that fundamental factors in notoriously boom-to-bust-to-boom-again computer chip industry suggest that chip factory capacity is again tightening up -- after two years of a global inventory glut. Chip plants are now operating at around a 70 percent or 80 percent utilization range -- with more than 90 percent of capacity taken up in the most advanced chip-making factories. "Is this a good time to invest because the upside is much bigger than the downside? The answer is yes," Gartner analyst Johnson said. Kinetics Group, the $1 billion-a-year parent company, targets its wares to the electronics, biopharmaceutical and industrial markets. The 29-year-old company has 7,300 employees worldwide, according to the company's Web site. The company boasts a complete line of gas, chemical, and water systems that hook into wafer fabrication machinery produced by other companies that is used to build the electronic circuits that runs the world's computers. Celerity would employ 900 staff and be headquartered in Milpitas, California, at the southern edge of Silicon Valley. Kinetic's other principal business operation is to provide facilities system management for the semiconductor equipment industry. It would remain part of Kinetics. Johnson said that Kinetics' process control business was part of a market for end systems that totaled $3.58 billion in 2001, or slightly down from the $3.73 billion in segment sales generated in 2000. KLA-Tencor (KLAC) is the dominant player in the process control market, he noted. "The good news is that if you are in with the big guys you have a significant chunk of the market," Johnson said of how -- as a supplier of subsystems -- Kinetics is poised to indirectly benefit from the sales of major name equipment makers. Celerity's closest competitors among public companies are are considered to be Advanced Energy Industries Inc. (AEIS) , MKS Instruments Inc. (MKSI) and Cymer Inc. (CYMI) . .