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

To: Cary Salsberg who wrote (5349)	2/5/2003 7:58:41 AM
From: Fred Levine	Read Replies (1) \| Respond to of 25522

Reuters UPDATE - Tokyo Electron posts Q3 loss, frets over future Wednesday February 5, 6:05 am ET By Edmund Klamann (Adds investor comments in paragraphs 12-14) TOKYO, Feb 5 (Reuters) - Tokyo Electron Ltd (Tokyo:8035.T - News), the world's second-largest semiconductor equipment maker, posted a quarterly loss on Wednesday and warned of an uncertain outlook despite signs the industry is at last poised for a rebound. ADVERTISEMENT Tokyo Electron, one of Japan's most actively traded high-tech shares, stuck to its target of a return to profit in the year to March 31 but pushed back by one quarter its forecast for a recovery in equipment orders, now seen coming at mid-year. "There are a lot of aspects that we just can't read right now," Noriyuki Kuga, head of the company's accounting department, told a news conference. "If there's a war with Iraq and it drags on for a long time, the whole scenario will fall apart." Tokyo Electron posted a net loss of 166 million yen ($1.39 million) for its fiscal third quarter to December 31, compared with a loss of 10.7 billion yen a year earlier. The operating loss came in at 1.52 billion yen, an improvement from the previous year's 14.9 billion loss. Sales rose 52.2 percent to 96.99 billion yen. Kuga said the quarterly result fell short of the company's expectations, due largely to chip equipment business that was simply delayed until the fourth quarter and would thus not affect its full-year performance. VOLATILE BUSINESS The company, whose complex machines play a vital role in forging microchips from silicon wafers, was knocked into the red during the semiconductor sector's record downturn in 2001, which hit the highly volatile chip equipment business especially hard. The current business year brought little sustained relief -- an early bounce in customer orders quickly faded as demand for chip-using products like PCs and cellphones languished. Tokyo Electron's shares shed 31 percent of their value in the second half of 2002, although investors said they likely bottomed out when they hit a one-year low of 3,870 yen in mid-October. "The worst was discounted. Now it (the market) is factoring in, albeit slowly, this gradual recovery story," said the chief investment officer at a foreign asset management firm. He also saw no reason to be discouraged by the company's cautious comments on its outlook. "It's not bad to bring expectations down to what the market is thinking. It is not giving the market a view that is too optimistic." Wednesday's earnings release came after the close of share trade. Tokyo Electron ended up 2.45 percent at 5,440 yen, outpacing a 0.19 percent rise in the Tokyo Stock Exchange's electrical machinery index (^IELEC.T - News). The company left its targets for the full year to March unchanged, projecting a marginal net profit of 500 million yen after the previous year's 19.9 billion yen loss and an operating profit of four billion yen, up from a loss of 18.3 billion yen. Revenues are expected to rise 7.7 percent to 450 billion yen. IRAQ, FLAT-PANEL TELEVISIONS Worries over the economic outlook have mounted, however, due to the prospects of war in Iraq, stock market weakness and a possible banking crisis in Japan. The industry already had a rocky start to the current quarter with a warning from U.S.-based rival Applied Materials Inc (NasdaqNM:AMAT - News), the world's largest chip equipment maker, that customer orders for the quarter would fall short of its targets. Tokyo Electron's orders, which precede sales by one to two quarters and correlate closely with its share price, fell 25 percent in October-December from the prior quarter. The company on Wednesday reiterated its forecast of 70-80 billion yen in new orders in the current quarter, compared with 71.9 billion yen in the last quarter. Until a few months ago it had been anticipating a rebound in orders from April-June, but Kuga said it had become clear by the end of last year that a recovery was unlikely until mid-2003. "Present conditions are poor and sentiment towards capital spending remains negative," Kuga said. "In the second half (of 2003/04) we expect there will be a rebound in quite a few areas, but there won't be much of a recovery before the end of the next quarter." He said strong demand for flat-panel TVs and other consumer electronics that are heavy users of microchips would likely help fuel a pick-up in business. The U.S. Semiconductor Industry Association has forecast 19.8 percent growth in the global chip market this year and 22 percent in 2004, although some analysts considered that overly bullish. (Additional reporting by Nathan Layne) fred

To: Cary Salsberg who wrote (5349)	2/5/2003 2:08:31 PM
From: Jong Hyun Yoo	Read Replies (1) \| Respond to of 25522

RE: "I am interested in your analysis of AMAT, but I am troubled by your placement of LRCX and NVLS in the same sentence." Dear Cary, I concur wholeheartedly that NVLS and KLAC are the better company than LRCX in terms of product competitiveness. KlAC has a virtual monopoly in the metrology and inspection market that will grow at even faster pace upon adoption of the copper market. NVLS clearly has shown excellent business execution in previous cycles and is the leader in the copper front-end processing equipment market. Given that next upturn will be driven by the copper and 300mm market, clearly these two companies are positioned well. LRCX is an interesting story. This company has struggled in mid 1990's due to poor business management. However, since Bagley's taking role as a CEO, the company has come a long way. I believe that LRCX has surpassed AMAT in the etch market and has very competitive position against TEL. Since there are three main competitors in the etch market, LRCX competitive position is definitely worse than NVLS and KLAC. However, you have to consider the fact that etch process is the most used steps (in number) in chip fabrication process and as a result, equipment market is big enough to allow more than one vendor to thrive during the upturn. What I like about LRCX at this point is that it has really streamlined its business model by outsourcing just about everything other than engineering. This will essentially allow the company to attain comparable operational efficiency to AMAT at somewhat lower gross margin point. LRCX has attained 2 billion revenue run rate during last upturn. Let us assume during this upturn, the company hit 1.5 billion peak revenue. I am expecting 20% operational efficiency. So Net income could be somewhere around 300 million which translates into roughly $2.5 EPS based on 125 million share count. With PE of 20, the share can climb to $50.. I think there is plenty of money to be made in LRCX as well. The real problem is "when is this downturn over?" I think no one really knows the answer but I am hoping towards early 2004...

To: Cary Salsberg who wrote (5349)	2/5/2003 2:10:59 PM
From: Jong Hyun Yoo	Respond to of 25522

RE: "I am interested in your analysis of AMAT, but I am troubled by your placement of LRCX and NVLS in the same sentence." Dear Cary, I concur wholeheartedly that NVLS and KLAC are the better company than LRCX in terms of product competitiveness. KLAC has a virtual monopoly in the metrology and inspection market that will grow at even faster pace upon adoption of the copper market. NVLS clearly has shown excellent business execution in previous cycles and is the leader in the copper front-end processing equipment market. Given that next upturn will be driven by the copper and 300mm market, clearly these two companies are positioned well. LRCX is an interesting story. This company has struggled in mid 1990's due to poor business management. However, since Bagley's taking role as a CEO, the company has come a long way. I believe that LRCX has surpassed AMAT in the etch market and has very competitive position against TEL. Since there are three main competitors in the etch market, LRCX competitive position is definitely worse than NVLS and KLAC. However, you have to consider the fact that etch process is the most used steps (in number) in chip fabrication process and as a result, equipment market is big enough to allow more than one vendor to thrive during the upturn. What I like about LRCX at this point is that it has really streamlined its business model by outsourcing just about everything other than engineering. This will essentially allow the company to attain comparable operational efficiency to AMAT at somewhat lower gross margin point. LRCX has attained 2 billion revenue run rate during last upturn. Let us assume during this upturn, the company hit 1.5 billion peak revenue. I am expecting 20% operational efficiency. So Net income could be somewhere around 300 million which translates into roughly $2.5 EPS based on 125 million share count. With PE of 20, the share can climb to $50.. I think there is plenty of money to be made in LRCX as well. The real problem is "when is this downturn over?" I think no one really knows the answer but I am hoping towards early 2004...