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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Big Bucks who wrote (25227)	10/13/1998 1:45:00 AM
From: Jacob Snyder	Read Replies (2) \| Respond to of 70976

nvls cc notes: 1. going forward, in 4Q98, they expect flat revenues, slightly lower expenses, and BTB>1. 2. 18% decrease in operating expenses in 3Q compared to 2Q. Operating expenses expected to continue to decline, but not by nearly so much, in 4Q. 3. 3Q sales decline reflects slowdown in capacity purchases. Asked when capacity purchases would begin again, CEO said, "Oh, geez. If I only knew. There is some firming in memory prices, and maybe there will be more hardware buying to solve Y2K problems. Maybe 2Q99." 4. btb for 3Q98 is less than 1:1. All questions for details on this were not answered. 5. gross profits down, secondary to large fixed overhead and declining sales. 6. sales down 31% from 3Q97 7. R&D: 23M in 3Q98, 28M in 2Q98, 25M in 3Q97, expected flat in 4Q98 8. accounts recievables increased due to "extended payment cycle from asian customers." 9. lots of orders pushed out from 3Q98 to 4Q98 10. R&D priorities: copper, loK, 300MM. 11. "we are winning business in .18 micron" 12. "we will not release control over expenses until we see a sustained upturn in bookings" 13. logic is main driver of copper. 14. the adoption of 300mm is going to be pushed by competition in the memory market, as they go from 64 to 256 to 1 gig 15. "a strong yen helps us in Japan" 16.all the analysts said, "good quarter." my comments: 1. there is a contradiction between saying that this quarter is the bottom, and continuing to downsize the company. Hiring new engineers to make semi-equip is not like hiring more waitresses at a restaurant. From what I've heard, it takes 6 months to get them up to speed. I would not be expecting management to downsize the company, including cutting R&D, if they thought this quarter (or next) really was the bottom. 2. How does he know there won't be another big pushout in orders, from 4Q98 to 1Q99 or beyond? He can't. And, if the BTB next quarter looks good because a lot of business has been shifted from 3Q to 4Q, does this really signal an upturn? 3. compared to AMAT cc, nvls provided a lot fewer hard numbers. They wouldn't give a number for current btb, and wouldn't break down sales or orders by region or product type. When asked for numbers, they gave qualitative or more-than/less-than answers. 4. the part about increasing recievables, and stretched out payments by asians, sounded ominous. Those semi companies' ability to pay in dollars is not going to improve anytime soon. Those payments could get stretched out to forever, although they specifically denied this possibility. 5. bottom line: they are doing a good job at cost control and contingency planning; but they don't really know if this is the bottom of the semi-equip cycle, for them or the industry.