Jtech,
Report: Semiconductor Equipment Stocks Flat Through '99; Adams, Harkness & Hill Analysis of Sector Bearish With Few Exceptions
BOSTON, Mass.--(BUSINESS WIRE)--April 23, 1998--Companies that supply
equipment to semiconductor manufacturers are expected to average flat
revenues at best through the end of next year, signaling a
longer-than-projected industry downturn, according to a new study by
investment banker Adams, Harkness & Hill, Inc.
A detailed analysis of the industry contained in the Semiconductor
Capital Equipment Industry Review concludes that the Asian financial
crisis and a glut in the world supply of DRAM memory chips both will
continue to discourage microchip makers from making capital investments. The report says most semiconductor equipment company stocks are valued too high to make good buys right now. It also makes detailed projections about semiconductor consumption, equipment demand, technology buys and a company-by-company valuation of the entire semiconductor equipment industry.
"The industry is in a retrenchment period," according to the report's
lead author, Adams, Harkness & Hill semiconductor equipment analyst
Frederick L. Wolf. "Our outlook over the next 18 months is bearish."
Semiconductor equipment stocks are seen by some analysts as a bellwether for the entire technology sector because equipment sales can signal a coming semiconductor recovery.
The Adams, Harkness & Hill report said the Asian crisis has discouraged companies from making capital investments. Many semiconductor manufacturers are located in Asia, which accounted for more than half of semiconductor capital spending in 1997. Japanese companies, which accounted for fully 25 percent of semiconductor capital spending last year, are unlikely to invest much in equipment before the year 2000 because of the economic uncertainty.
"With DRAM prices still going down and the financial problems in the Far East, particularly Korea, I'm becoming less and less optimistic that the chip companies in the Far East will build new fabs," Wolf said.
The most recent upturn in the industry was early last year, as companies spent money to upgrade their existing factories with equipment that produces chips with super-thin circuit widths of 0.25 microns. But the Adams, Harkness & Hill report said companies are unlikely to spend as much on equipment over the next 18 months because of a continued DRAM overcapacity and a tenuous outlook for the foundry business in Taiwan, an emerging player in the industry.
The Adams, Harkness & Hill report rated most of the 14 companies it
analyzed as "Market Performers," which means their stocks will fare
about as well as the industry does. Four were rated as attractive, while three others were expected to perform below the industry as a whole.
Some companies whose stocks were classified as "attractive" make
equipment that perform "back-end" functions -- assembly-line maintenance or quality control, for example -- equipment that is expected to have a stronger demand than production machines themselves. Other companies with recommended stocks enjoy dominant positions in their respective markets.
Adams, Harkness & Hill serves as an investment banker to emerging growth companies and provides sector-specific, comprehensive research to leading buyside institutions. Located in Boston, the firm provides a full range of integrated capabilities, which include research,
investment banking, securities trading and investment management. The
company's research team actively follows more than 150 emerging growth
companies, providing qualitative, objective and in-depth analysis to
more than 500 institutional investors across the United States,
including mutual fund companies, insurance companies and banks.
CONTACT:
The Hubbell Group, Inc.
Constance Hubbell, 781-878-8882
KEYWORD: MASSACHUSETTS
BW1354 APR 23,1998
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Varian <VAR.N> "tempering" views on FY98 earnings
PALO ALTO, Calif., April 23 (Reuters) - Varian Associates Inc. said
Thursday it is "tempering" its views on 1998 sales and earnings but
expects its three businesses to post higher revenues than in 1997.
"If those gains are achieved as planned, 1998 will still be a good year for Varian with revenue growth on the order of 10 percent and earnings per share that exceed last year's $2.74 (on a thin-fim adjusted basis)."
Analysts expected Varian to post 1998 earnings of $3.36 per share,
according to research firm First Call.
Tracy O'Rourke, the company's chairman and chief executive officer, said Varian expects its ancillary products business - which ranges from patient management software to bolt-on accessories to enhanced machine performance - to continue to experience double-digit revenue growth and improved margins in the second half.
He said the company's semiconductor equipment segment should end the
year with higher revenues and margins in the middle-teens, despite
expected lower orders in the second half.
O'Rourke said Varian's second half will present some "challenges,"
particularly with the weakness in Asia likely to have a "somewhat more
pronounced" effect on semiconductor equipment and instruments operations and given the high expectations Varian has for its Health Care Systems segment.
"A full recovery in chip equipment demand will not appear for several
more quarters (on a thin-film adjusted basis)," O'Rourke said
The health care systems, semiconductor equipment and analytical
instruments company reported second quarter earnings of $23.O million or $0.75 per diluted share compared with $17.3 million or $0.55 per diluted share a year earlier. Sales for the quarter were $372.82 million compared with $338.19 million a year ago.
10:37 04-23-98
Copyright 1998 Reuters Limited. All rights reserved.
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Electroglas Reports First Quarter Results
SANTA CLARA, Calif.--(BUSINESS WIRE)--April 23, 1998--
Electroglas, Inc. (NASDAQ:EGLS) reported today operating results for
its first quarter ended March 31, 1998.
The Company previously announced on March 27, 1998 that it
anticipated lower than expected business volume for its first quarter.
As anticipated, revenues were $36.9 million, up 44% from the same
period last year but down 17% from the immediate prior quarter, and
net loss was $.4 million, or $.02 per diluted share, for the current
quarter versus breakeven a year ago. Net loss in the immediate prior
quarter was $.9 million, or $.05 per diluted share, including a
one-time charge of $3.5 million for in-process R&D associated with the
Company's acquisition of Techne Systems, Inc.
As previously announced, the Company's first quarter order rate
was lower than anticipated for its prober products, due to the
continuing softness in demand for semiconductor equipment stemming
from end-user excess capacity, coupled with a depressed pricing
environment, as well as ongoing uncertainty about business conditions
in Asia.
Commented Curt Wozniak, CEO of Electroglas, "The worldwide
slowdown in the semiconductor and semiconductor equipment markets that
began in late 1997 has continued to impact Electroglas through the
first quarter. Bookings for new business continued to fall, and has
reduced backlog and visibility into the second quarter. Bookings were
$26.6 million, resulting in a book to bill ratio of .72." Continued
Wozniak, "As a result, we have curtailed discretionary spending,
eliminated new headcount requisitions except engineering personnel,
and most organizations are taking additional days off for the second
quarter."
Added Wozniak, "At the same time, industry forecasts now indicate
the downturn may last through 1998 and possibly begin an upturn in
early 1999. Being prepared for the 300mm era and customer requirements
for the 200mm expansions, however, requires us to continue to invest
aggressively in new product development during the downturn. Since
300mm pilot plants are now being planned for 1999, we have accelerated
our spending on our 300mm wafer prober program to be prepared for
early customers, while maintaining significant new product development
on our 200mm products. The 4090micro has begun early shipments to
selected customers, and the new SORTnet+ products are targeted for
release by the end of the second quarter.
"In addition, we continued to make progress on our new yield
management and inspection businesses," concluded Wozniak. "Knights
Technology continued to penetrate new accounts around the world, and
is increasing revenue in spite of the slowdown. The inspection
business has now delivered multiple systems, installed in production
at customer sites, and booked additional systems for delivery in the
second quarter. We believe we will begin to recognize revenue from the
inspection business in the second quarter," Wozniak said.
Legal Notice Regarding Forward-Looking Statements
Statements in this press release which are not purely historical
are forward-looking statements, including statements regarding
Electroglas' plans, expectations or intentions regarding the future.
Forward-looking statements in this release include, but are not
limited to, statements regarding the industry downturn lasting through
1998 and possibly beginning to upturn in early 1999, continuing to
invest aggressively in new product development, plans for 300mm pilot
plants, the Company's preparedness for early 300mm customers,
maintaining significant new product development on 200mm products, the
timing of the release of the new SORTnet+ products, increasing revenue
from Knights Technology and the timing of recognition of revenue from
the inspection business. All forward-looking statements included in
this release are made as of the date hereof, based on information
available to Electroglas as of the date hereof, and Electroglas
assumes no obligation to update any forward-looking statement. Factors
that could cause actual results to differ materially include risks and
uncertainties such as continued or increased softness in demand for
semiconductor equipment, particularly softness related to weakening
economic conditions in Asia; unexpected cancellations or delays in
customer orders; unexpected declines in the level, or continued lower
levels, of capital expenditures of semiconductor manufacturers;
continued softness or further declines in the demand for
semiconductors; the introduction of competitors' products having
technological and/or pricing advantages; unexpected constraints,
particularly fiscal restraints related to the current industry
downturn, impeding the Company's investment in product development in
such areas as its 300mm products: unforeseen technological
developments, difficulties and delays related to the Company's current
and future products, particularly its new 300mm, 200mm and SORTnet
products and plans; changes in market conditions related to need for
yield management products and semiconductor manufacturing equipment;
and customer acceptance of product offerings resulting from the
Knights and Techne acquisitions and unexpected delays in recognizing
revenue from such products, including inspection systems, due to such
factors as lengthy customer product acceptance or payment procedures.
Readers should also refer to the risk disclosures outlined in
Electroglas Form 10-Qs filed from time-to-time and the Form 10-K filed
for Electroglas' fiscal year ended December 31, 1997.
About Electroglas: Electroglas, Inc. is a leader in the
development, manufacture, marketing and servicing of automatic wafer
probing equipment and yield management software for use in the
semiconductor industry. The Company's stock trades on the Nasdaq
National Market under the symbol "EGLS". The Company's World Wide Web
site is located at electroglas.com.
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