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

To: william Velmer who wrote (14407)	2/8/1998 6:59:00 PM
From: Tulvio Durand	Respond to of 25960

Quoting an interesting statement about Cymer from William Velmer's newsletter: saadvisory.com Most brokerage firms lower earnings estimates for 1998 form $1 plus to around .45---I believe that this will change very soon and be upgraded to around .65-.70 for 1998 and over $1 for 1999. Velmer doesn't say why he thinks that. Yet I feel the same as he does. My rationale -- (1) A&A team is very conservative, and they absolutely do not want to disappoint expectations for next Q. Having told a good story in the CC (increased R&D for out-distancing the competition, stock buy-back, etc.) gave them the low-risk opportunity for low-balling earnings expectations for the next Q that will lead to up-side earnings surprise. (2) Pessimism over SEA outlook is starting to abate. SEA markets have been rebounding nicely, thereby enhancing those countries' ability to obtain financing for capital equipment. They might be buying sooner than what most analysts thought possible. (3) Heightened competition is emerging among chip makers to be first with production 0.25 micron product and some (like AMD) even skipping this stage and going to 0.18 micron production could mean accelerated demand of DUV lithography tools. (4) As NWBF, Yakov, et al have pointed out on this thread that, since Cymer's infrastructure costs will remain relatively fixed, it does not take much increase in revenue to increase earnings dramatically. Ample spare production capacity exists for churning out product in a hurry if and when the new orders materialize. Also, we might expect expansion to round-the-clock support (and greater sale of spares) for the DUV tools in place if the chip makers are indeed serious about getting sub 0.35 micron products out the door in a hurry. Tulvio