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Technology Stocks : Cymer (CYMI) -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (9808)	11/15/1997 7:30:00 PM
From: Jess Beltz	Read Replies (2) \| Respond to of 25960

Elroy, large scale failures in the Japanese banking sector have the potential to affect Cymer and its Asian customers (Canon and Nikon) in several ways: (1) Raising capital: Large scale woes in a banking sector often (usually) precipitate a credit crunch. Recall that the problems in the Japanese banking sector are not simply that equitiy values are falling leading to nominal insolvency, but also that many of the loans in Japanese bank loan portfolios are (a) bad, and (b) unsecured since the collateral for the loans was often property, which has plunged in value. Recall also in the early 1990s, when the Real Estate Crisis hit the Northeast (Trump went bankrupt, etc.) that there was a real credit crunch in the US. If Cymer's Asian customers need capital to fund expansion, it may be very hard to come by. They almost certainly won't turn to the stock market for obvious reasons, and if a credit crunch ensues, debt funds may be hard to obtain. Useful information here would be information about their balance sheets. How much cash and marketable securities are they carrying, and what are their debt/equity ratios. Strong balance sheets and low debt ratios would suggest that they can afford the expansion and may do so to not be left behind in the technical evolution. Small amounts of cash and cash equivalents and larger debt ratios (both D/E and Current ratio) would suggest they will be more hesitant to expand as a matter of near-term economic survival. THC, could you help on this front? I will also turn to my own sources and see what I can find out. (2) As far as near-term stock price is concerned, there is an obvious perception problem. Investors are routinely being councelled to avoid semi and tech stocks with Asian exposure, and Cymi obviously has a ton of it. News in the articles we've been looking at is starting to come out that almost all of the trade back and forth between Asian semi companies and the West is in dollars, and hence they are a pocket isolated from many of the domestic crises. However, it may take time for the broader investment community to realize and accept this information, and in view of the recent troubles, (and I might add the damage to the portfolios of many Cymer veterans on this thread) it may take time for the stock price to recover. I think we may see a near-term recovery to the mid twenties as bolder Wall Street players recognize the potential value in a play on CYMI and start to take positions, particularly if shorts realize that there is little further downward potential in the stock and cover out. However, ascendancy to restored proper valuation (36-40 or 50) will take the broader acceptance of the investment community as a whole, and that may take a bit of time. The obvious barometer will be what happens with analyst recommendations. If we see upgrades soon, the stock price could well take off (that certainly will hasten the short covering.) It just may take time for analysts to side with our view. And there IS the potential for order pushouts in the future due not only to financial circumstances but to real production floor problems involving the steppers themselves and their ability to implement DUV systems in factory-production environments. I find it interesting that Carl Johnson at Infrastructure stands in marked opposition to some of the analysts in the smart money article, particularly on the affect of DRAM prices and "dumping" on the semiconductor industry. A few thoughts..... jess

To: Elroy Jetson who wrote (9808)	11/15/1997 8:09:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 25960

Elroy, when we had our banking crisis (and not just the Saving and loans, hundreds of other banks were merged or closed), we took the write off and decreased the value of our book (and the taxpayer paid the difference). If you'll remember that is when our own mighty green back declined (and finally bottomed last year at 80 ye/$), that devaluation of our dollar together with the last 10 years of corporate restructuring is what gave our semicoductor another chance to play. And sure,, we went trough two wrenching periods for semi during those years. Zeev