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Strategies & Market Trends : Bill Wexler's Profits of DOOM -- Ignore unavailable to you. Want to Upgrade?

To: Bill Wexler who wrote (3766)	11/18/1998 7:44:00 PM
From: Mr. Miller	Respond to of 4634

Bill, I posted this over at Roger's short clubhouse thread. What do you think? Short SFAM(Speedfam). If you wish to make about 40-50% in the next month, it is worthwhile to read all of this post. SFAM will have its worst quarter in years and post a substantial loss for the quarter ended 11/30/98. Results due out 12/22. Company preannounced. A review of this company's fundamentals yield some disturbing trends. You cannot knock the data of the past. This is all facts.. (revs and earnings in millions) dates indicate quarter ended that day date revs earnings date revs earnings 5/31/97 49.3 6.5 5/31/98 26.5 (5.5) 8/31/97 53.8 5.6 8/31/98 36.4 0.2 11/30/97 56.5 7.6 11/30/98 19.5-22 (4.0-5.0) On top of this, the stock went from about $30 to less than $10 from the time of May 1998 to mid-September 1998. This was when the company's financials were suffering. However, the revenues rebounded to $36.4 million, though lower from the year earlier, it increased from the previous quarter debacle, eeking out a profit. The stock must have started the uptrend in mid September in anticipation of the continued rebound, along with the recovery in the overallmarket. However, I do not think the overall market can bail out SFAM this time. You see, the quarter we are in is not only bad, it is the worst in years for the company. Estimations by the company are for revenues of $19.5 to $22 million, and to lose almost $5 million. Even if they overshot, this is a very, very bad quarter. Cash they have accumulated in the past is dwindling fast. Losing $10 million over the last 3 quarters is not helping the kitty. So, we have the worst quarter in years. Major losses. Down over 50% for the year to today's close. Losing market share to competition in its area of business. Looks to me like the ascent in stock price from mid-September to last week was in hopes that the uptrend would continue, and with the company preannouncing bad results, the stock has slowly tumbled. It trended down from about $18 to under $10 in just four weeks from mid-August to mid-September. It has begun again. One week down and three weeks to go. Those who own now could get out now while you still have profits. No way is this stock a buy. The numbers are all facts. Check it out yourself with whatever resources you have. I am short. ******************************************************** A report from Montgomery, one of the analysts who follow SFAM: 1. Reduce Rating From BUY to HOLD as SpeedFam Loses CMP Market Share. We attended SpeedFam's presentation at the AEA conference this week. Based on our checks with other CMP suppliers and end-users, we believe SpeedFam has lost market share to Applied Materials, Ebara and IPEC. Applied Materials has made tremendous strides in the CMP-Mirra product this year booked $130 million of CMP systems in the first half of AMAT's fiscal 1998. We believe, given the strong bookings momentum, bookings could exceed $130 million of CMP tools in their second half of fiscal 1998. Applied has focused its efforts on oxide CMP applications, taking significant share from IPEC and SFAM. IPEC, has conceded lost market share to Applied on oxide CMP applications but maintains an edge on metal CMP applications as Applied has paid less attention in that arena. The consequence is that SpeedFam has lost ground on both types of CMP applications this year. 2. Lost Market Share Attributed to Focus on 300 mm Product Activity. Earlier in the year, as equipment suppliers foresaw the indefinite postponement of 300mm technology implementation, OEM providers immediately shutdown or severely curtailed their 300mm program. SpeedFam however continued its 300mm activities through most of 1998 diverting its focus from current 200mm CMP applications. As a result, SpeedFam lost momentum on 200mm. Recently, SpeedFam elected a new president and CEO, Richard Faubert, a former senior executive from Tektronix to refocus the business. Makoto Kouzuma has moved to the role of vice-chairman with Jim Farley remaining as chairman. 3. Maintaining Estimates However We Believe Earnings Could Weaken Further. SpeedFam will report its fourth (November) quarter fiscal 1998 results in late December. Although we are maintaining our estimates based on the tone at AEA, we believe estimates could be reduced again following SpeedFam's earnings release. It is unlikely the company can resize its business quickly enough to manage breakeven levels by mid-1999. Losses could extend through most of next year. 4. Disk Drive Market is Showing Signs of Improvement But Wafer Polishing Outlook Remains Dismal. There appears to be signs of increasing interest in SFAM's CMP disk media and thin film head (TFH) substrate polishers. SpeedFam noted that the market outlook could start to improve with TFH orders beginning in late fiscal 1999. However, silicon wafer manufacturers are still dealing with excess capacity with virtually no silicon wafer polisher orders expected for many quarters out.

To: Bill Wexler who wrote (3766)	11/24/1998 6:54:00 PM
From: Bill Wexler	Read Replies (1) \| Respond to of 4634

AMAT is up again!! It must be my dumb luck! I have to start paying more attention to those fine analysts that say "AMAT is getting ahead of its fundamentals," or "Intel is hiding problems," or "Avoid CompUSA" and I have to stop believing Intel management when they say that inventories are way down and new demand is voracious. I then make stupid assumptions like the following: 1) Demand for semi equipment is going to accelerate through 1999 and 2000. 2) Eventually, lots of nifty goodies will get blown out through the retail channel, along with a whole new generation of software. That retail channel I'm talking about is CompUSA and their competitors - such as uh.... ah.... errr..... Oh, I almost forgot! That's right-- EGGHEAD.COM is a "competitor" to CompUSA....that's why smart investors are throwing away CPU stock at .20 PSR and snapping up EGGS at a 3 PSR. After all, Egghead is now in the super-profitable internet ham auction business: biz.yahoo.com Gosh, I just know I'm going to the poorhouse by saying this but I'm going to throw caution to the wind and recommend: 1) Strong buy AMAT 2) Strong buy CPU