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

To: ForYourEyesOnly who wrote (12016)	12/27/1997 10:41:00 PM
From: Apple12	Read Replies (2) \| Respond to of 25960

New twist to an old problem: Cymer can meet demand now! DOW JONES ONLINE NEWS EXPERTS SAY CYMER'S WOES DUE TO HIGHER OUTPUT; STOCK DOWN SHARPLY by Mark Boslet Staff reporter PALO ALTO, Calif. -(Dow Jones)- Cymer Inc.'s woes may be as simple as this: laser production now equals demand. Finally, this producer of market-leading lasers used in semiconductor production is able to make as many products as customers want. So instead of customers inflating orders to make sure they have at least as much as they need, these companies such as Nikon Corp. and Canon Inc. (CANNY) are ordering at more normal levels. So say experts in the semiconductor equipment market who have been closely watching the rollout of a wave of new technology - technology capable of creating even more minute integrated circuits with a width of 0.25 microns. Cymer's deep ultraviolet lasers are used in complex steppers that sketch this circuitry on silicon waffers. These problems have had an effect on the company's stock (CYMI), which has fallen sharply recently. In mid-morning trading Friday, shares were down $3.75, or 13%, to $26.25 on volume of more than 2.6 million shares; average daily volume is 2.1 million. The shares traded above $39 last week. A year and a half ago, Cymer didn't have the capacity to meet demand, said G. Dan Hutcheson, president of VLSI Research Inc. of San Jose, Calif. Customers responded by double ordering, he said. Since then, the San Diego company has increased its production, and customers have responded by reeling in unnecessary orders, Hutcheson said. "I don't see anything odd here other than an inventory fluctuation," Hutcheson said. The company finally has "enough capacity to meet the demand," reports Robert Akins, Cymer chief executive. In the past month, since acknowledging that one unnamed customer postponed, or pushed out, orders for lasers, Cymer has been the subject of intense Wall Street scrutiny and speculation. Rumors flew that a company factory caught fire, that its lasers leaked gas, that rivals in Germany and Japan were getting the orders instead. All were false, Akins said. Genuine concern, however, has been focused on the difficult task of readying steppers for production lines. Montgomery Securities analyst Brett Hodess on Monday cut his rating on the stock to "hold" from "buy" after becoming concerned technical problems at Nikon and Canon could cause further pushbacks in laser orders. It is a contention Cymer disputes. The company has "nothing to support the theory there are manufacturing problems," Akins said. Further, purchase forecasts from customers are not changing, he said. But knowing for sure whether technical problems have cropped up is difficult. Stepper makers are careful not to let too much information escape as they debug their machines in pre-production tests. They fear the information could end up in the hands of competitors. This is especially true as Nikon and Canon find themselves competing against higher quality machines from Dutch-based ASm Lithography Holding N.V. (ASMLF), also a Cymer customer, one industry executive said. Canon and Nikon have debugging to do, but the rollout of the technology is going as expected, Hutcheson said. Industry sources say the most visible problem seems to be a complex interface Nikon has been working on to better coordinate the function of the laser and stepper. At the same time, demand remains strong. And it is expected to get stronger. VLSI expects sales of deep ultraviolet steppers to climb from $459 million in 1996 to $1.366 billion this year and to $5.059 billion in 1998. Projections for 2000 show the market at $8.04 billion. Still, Cymer's third quarter is not without risk. The order push out in early September caused the company to lose time refitting the products for other buyers, Akins said. That has left it racing to close business by the end of September. Copyright (c) 1997 Dow Jones & Company, Inc. All Rights Reserved.