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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (3521)	10/8/2002 3:26:59 PM
From: Proud_Infidel	Respond to of 25522

Cypress CEO issues apologetic letter to shareholders Semiconductor Business News (10/08/02 12:17 p.m. EST) SAN JOSE--In an unprecedented move, T.J. Rodgers, president and CEO of Cypress Semiconductor Corp., here today issued a somewhat apologetic letter for the company's poor stock performance and vowed to cut costs to improve the bottom line. The move was in response to the company's sagging stock price, which apparently sunk below the $4 range. Cypress and other chip makers have been hard hit by the IC downturn, causing the sector to take a major beating in the stock market. In response, Rodgers today released a letter to Cypress shareholders and employees providing details about the recent fluctuations in Cypress' share price. A copy of that communication was made public, in which the Cypress CEO insisted the performance of the company remains strong despite the IC downturn. But in the letter, he also indicated that the company can weather the storm, but it will also continue to cut costs: “You have asked whether or not we have the 'financial strength to survive until the economy recovers.' The answer is an emphatic, 'Yes.' “We have decided that we will size Cypress to be profitable in the near term. If, after polling our customers once more on their probable demand over the next six months, we can expect modest revenue growth to our current $210 million break-even point, we will simply move forward without changes. If we see our revenue becoming stalled in the $190 - $205 million range, we will cut costs to achieve breakeven at the lower revenue level,” he said in the letter. In the letter, Rodgers also commented on Cypress' performance: “Currently, Cypress's performance is good, much better than it wasduring the downturns of 1991-1992 and 1996-1998. The collapse of shipments to our customers in the communications industry cut Cypress's revenue in half from a peak of $370 million in the fourth quarter of 2000 to $180 million in the third quarter of 2001, causing our first quarterly loss in the current downturn. Since then, our finances have improved every quarter for a year....” Rodger also gives an explanation for the company's slumping stock price: “...the current low share price exists at a time when Cypress has just posted its best results in a year. Obviously, factors other than just quarterly performance must be responsible for the recent share price decline. “One factor was our September 6, 2002 "pre-announcement" for the third quarter in which we said we would improve less in third-quarter revenue and earnings than we had previously expected. (Our first forecast was for revenue of $208-$213 million and proforma breakeven earnings. The actual results were $205 million in revenue with a $0.03 loss, up from $202 million and a $0.05 loss in the prior quarter.) Obviously, this pre-announcement alone cannot rationally explain the recent share price decline.” Another major problem for Cypress is clear: the IC downturn. In the letter, Rodgers also explains the problems in the industry: “One concern hanging over Cypress and the entire semiconductor industry is the possibility of another round of softening in semiconductor sales. I said earlier that our results for Q3 would be up, but not by as much as we thought just 90 days ago. The new problem in the semiconductor market is that, in addition to the well-publicized collapse of the communications market, the personal computer (PC) market is experiencing anemic, but not catastrophic, year-end business -- traditionally when PC sales are strongest. “Investors are concerned that the semiconductor market could stay sluggish for a while. In that case, Cypress's revenue could settle in the range of $190-$210 million per quarter, with modest quarterly proforma losses in the $(0.08) - $0.00 range -- if we did not make any changes.