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

To: FJB who wrote (12756)	1/17/1998 1:30:00 PM
From: Yakov Lurye	Read Replies (1) \| Respond to of 25960

The following analysis may have some serious holes and is offered just for discussion purposes: Laser based stepper/scanner forecasts: 1)Nikon predicts 160 steppers, 2)ASMLF (as per analyst forecast) shoul ship 150 steppers in 1998. 3)Canon expected to sell 200 - number was on their page in November, but their forecasts were probably a bit optimistic (Nikon reduced their forecast by 20%). They still claim though that they will ship more systems than ASMLF (by unit count, if not in $ volume). I would venture a guess of 140 units. 4) Have no idea about SVGI (saw predictions ranging from 50 to 150, these were not differentiated between MSII, improved MSII for .25 and MSIII. Overall, 500+ laser-based DUV systems should be shipped in 1998, even with 300mm wafer fabs being delayed. If 1H99 is better than 1H98 for DUV lithography (no big feat given the current climate), manufacturers should reorder 500+ lasers in 1998. Most of these will be CYMI lasers - unless Komatsu and Lambda come up with a better mousetrap pretty soon, so I am counting on 500 lasers to be sold by CYMI in 1998. Anything above this will be the icing on the cake. With 500 lasers shipped, 1998 may not be a banner year for CYMI, but it will still show year-to-year growth in shipments, with volumes accelerating towards the second half. Some service revenues may kick in, so $1.10 FY98 earnings projections look conservative. Short term: I assume that manufacturers had about 150 (maybe a bit more) lasers on hand as of end of October (if I read correctly the statement made during CC that about half of lasers shipped were already in working systems). That's slightly higher than expected 125-130 lasers per quarter output. Taking into account 300 mm fabs pushouts, this may lead to new orders for 4Q97 -1Q98 on par or slightly lower than expected 125-130 lasers per quarter output. Accordingly, for the next two quarters analysts that downgraded the stock can remain cautious/pessimistic about CYMI and still look smart. Pricewise, I would not be surprised if the stock continues to be depressed until early summer. With DUV sales expected to accelerate towards the end of the year, we'll see higher orders starting 2Q98 - these will show in June earnings reports. At this point, I expect upgrades and runup in the stock price. The bottom line is that we need some patience and may see the stock dipping lower. However, quarterly earnings estimates should be met, so I can't see much stock-specific downside. It will follow the semi-equip group trends (that are largely dictated by chipmakers trends expressed by SOX) and remain priced at .5-.6 of AMAT. Starting in June, things should brighten up considerably. Warning: my crystal ball is very unreliable when it comes to future beyond a couple of days. Y.