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

To: FJB who wrote (13573)	1/30/1998 2:57:00 AM
From: Matt Webster	Read Replies (1) \| Respond to of 25960

Questions Raised From the Conference Call... After listening to the conference call in its entirety, I have the following questions that I think of as issues for Cymer investors to address. Product Transition == with the introduction of the 5010 1 KHz and Orion 2 KHz lasers, will pushout orders for the 5000 series simply be converted. If I was a wobbly chaebol, who had to delay purchases for any number of reasons, I might as well turn lemons into lemonade and get the latest version. The counter to this is that time to delivery (18 months?) is prohibitive. The counter to that is that Cymer has capacity beyond demand, so they can build as many lasers as people are willing to buy. Expectations Management -- is the statement about a pushout for 1Q really based on a known reduction in orders, or is it management's attempt to provide a basis for a summer upside surprise? It makes very little difference to a company intent on buying back stock whether the price gaps up this quarter or the next. Those who are still long Cymer (particularly employees) have rode out the down cycle. I think they may be trading a short term bump for a long term move, as the summer upside leads to a consensus strong second half. This is a signal to other semiconductor stockholders about when the cycle may turn around most dramatically. Doubling of Revenues from Service and Support -- this is key to the company's ability to continue throwing off cash and maintain a stable stock price. It is similar, I think, to "unrecognized revenue" by software firms in that it allows the company to cushion sales with revenue from other sources. It is supposed to nearly double from 8% to 15%. Very good. Trending higher ASP's -- while the management would not talk specifics, they said the ASP's for the Orion and the 5010 would be higher due to their obvious superior performance. They also said in a later question that ASML and Nikon were raising stepper prices, which was creating some positive feedback in pricing. This is a significant revelation to the Street, I would guess. All in all, I thought the conference call was mostly positive. The analysts were not terribly aggressive in their questioning or tone. Not much time was spent on the sequentially down 1Q. Two of them even said "Congratulations," and the last one openly complimented Cymer management. In the beginning, they announced that they would use a new PR firm to improve visibility, which is also a plus. In effect, they admitted they were still learning how to manage a public company, which is another plus in my book. My greatest concern is catching the bottom in the near term if it trends lower. I hold Feb 15 puts against the shares, so I want a graceful exit out of the puts. If it gaps up in the coming days, I will reinsert puts at the 22-25 level. Good luck everyone, Matt