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Technology Stocks : Dupont Photomasks (DPMI) -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (397)	3/19/1998 9:31:00 PM
From: Duane L. Olson	Respond to of 955

Jeffrey, Sure was nice to see Katherine drop by our thread.. I had sent her an email over at "SemiconductorOnline" (where she is the the Editor), mentioning the excellent report she had done on the UT work --that was the report we all spent so much time discussing when the news on .08u came out... I learn a lot every time she comments.. I share your high enthusiasm for Etec... have not yet bought it myself, but must do so before their April earnings come out: What are you looking for..earnings wise? My own numbers are, tentatively: $.72 for the April quarter, vice $.38 for Jan...$2.40 for the year ending July 98, followed by $3.30 for the July 99 fiscal year...justifying a 40 PE then, IMHO...for a target price of 130.. TSO BTW...My understanding (back to DPMI) is that photomasks can be used for only a limited number of wafer passes.. Thus (if true) photomask use is directly related to chip unit production at any particular level of complexity.. Is that not your understanding as well? TSO

To: jeffbas who wrote (397)	3/20/1998 9:24:00 AM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 955

>>It seems to me that if DPMI can earn a good return on the investment, they will buy the ETEC machines. If they can't they will buy the minimum necessary, but will have their existing mask making operations. Thus ETEC seems to be the company more leveraged on the profitability of high end mask making. Do you think this is an accurate view of things and do you have any comments?<< In any other industry, that view would be precisely correct. The semiconductor industry is weird though, because its entire business model is built on Moore's law-- the number of transistors doubles every 18 months at no additional cost to the consumer. For the chip makers to stay on that curve, they have to have advanced masks, whether they make them internally or buy them from DPMI or PLAB. That means someone has to buy tools (probably from ETEC) to make the masks with. Thus, ETEC is a pure play on the continuation of Moore's Law. A bet on DPMI or PLAB is a bet on the company's ability to produce advanced masks in volume at a reasonable profit. While PLAB and DPMI might survive without advanced masks (because they do have revenue from larger feature sizes), future revenue (and therefore earnings) growth depends on their ability to cover the high end. Furthermore, chip makers prefer to buy all masks for a given design from one supplier, meaning the supplier that succeeds on the high end will get more of the low end business as well. In short, innovate or die. Katherine