Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: TideGlider who wrote (14359)	2/7/1998 1:43:00 PM
From: Mr. Aloha	Respond to of 25960

Yes, all things considered a 10-15% reduction in revenue is not very large. We'll be able to quickly see the R&D costs etc... Aloha

To: TideGlider who wrote (14359)	2/7/1998 5:13:00 PM
From: Yakov Lurye	Read Replies (4) \| Respond to of 25960

Bruce, not to be nitpicking but: You'd written: >>According to the CC and release they stated 10 to 15% revenue decrease in Q-1 as compared to Q-4 97. That comes to approx. 21.6 to 20.4 cents ps. >> I assume that you just took 24c/sh earnings and decreased them by 10-15%. This is not the right way to project the impact of reduced/increased output. CYMI carries a lot of fixed costs that do not change no matter how many lasers they sell. If they sell 15% less lasers, their revenues will fall by 15%, but their expenditures will not fall proportionately. The 15% decrease in sales will result in much higher decrease in EPS and even without additional investment in R&D, CYMER's 1Q EPS with 15% smaller sales would fall way below 20.4 c/share. To put a positive spin on the same topic, even a small increase in revenues later in the year (e.g., from the sales of more expensive new lasers, or from selling more lasers than predicted) could create a considerable improvement in EPS. Financially, early 1998 could be quite difficult - R&D expenses will be incurred without being (partially) offset by sales of more expensive 5010/ Orion lasers. Furthermore, in anticipation of new laser models, DUV manufacturers have little incentive to increase on-hand inventory of 5000 series lasers, this does not help sales. Therefore, I do not look at 10c/sh for 1Q98 as an easy target. By the same token, as the year progresses, R&D cycle will start winding down and additional incremental revenues from sales of more expensive models should kick in. For these reasons, FY98 estimate of 40c/sh strikes me as very conservative (with usual caveats - stepper demand does not deteriorate below current 460 systems forecast, introduction of new lasers will not run into unforeseen design problems, etc). Having said that, I must also say that I don't think anymore that actual earning numbers are very important for the stock price. Analysts representing the interests of major MMs could always find a reason for upgrades/downgrades reflecting the interests of their clients. At the moment, CYMI is priced at 50 x FY98 EPS estimates, but this does not tell me much about the near-term stock direction. Regards, Y.