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Technology Stocks : PRI Automation (PRIA) -- Ignore unavailable to you. Want to Upgrade?

To: Sultan who wrote (543)	11/30/1998 12:21:00 PM
From: Beltropolis Boy	Read Replies (1) \| Respond to of 1214

for what it's worth, the following is culled from lehman bro's post-earnings write-up (dated nov 20). you can look at the whole report (.pdf) at the url below. ----- PRI Automation: 4Q98 Results In-line Author: Edward C. White, Jr., CFA 1(212)526-4744/Tolomy Erpf Rating: 1 Company: PRIA Rank (Old): 1-Buy Rank (New): 1-Buy Price: $20 3/8 52wk Range: $41-9.56 Price Target (Old): $45 Price Target (New): $40 Today's Date : 11/20/98 Disclosure(s): Lehman Brothers Inc. makes a market in the securities of this company. Highlights * After the close yesterday, PRI Automation reported a loss of $0.20 per share, excluding a charge of $7.0 million net of taxes, below our estimate of an $0.08 loss and Street expectations of a $0.10 loss. * The book-to-bill ratio was above the industry average of 0.55 and backlog at the end of 4Q98 was $52 million. Management conservatively expects to continue operating the company at a loss for the next three quarters. * We are lowering our earnings estimates for 1Q99 and FY99 to $(0.25) and $(0.60) from $(0.05) and $0.25 respectively; and establishing an EPS estimate of $1.25 for FY00. We are lowering our 12-month price target to $40 from $45. * While visibility remains low at 1-2 quarters, mgmt. believes that orders have bottomed. Citing increased customer interest in the last several weeks, orders are expected to improve sequentially over the next several quarters. * Although FY99 will indeed be a tough year for PRI Automation, we believe that the opportunity for substantial order improvement over the next 12-18 months should be realized in FY00 EPS. We continue to rate the shares 1-Buy. Summary 3Q98 Results: Although some orders were pushed out during the quarter, the book-to-bill ratio exceeded the industry average of 0.55. Orders from existing versus new fabs were approximately 68/32. Despite the difficult operating conditions, the company generated $9.1 million of cash during the quarter. DSOs increased from 70 days in the prior quarter to 81 days in the current quarter. Capex was $710 thousand and depreciation was $1.53 million. Management states that it won all available orders for factory automation systems during 4Q98. The company's Equipe division robots have now been designed-in on 45 OEM machines, up from approximately 40 in 3Q98. Outlook The company's factory automation revenues are expected to bottom in 1Q99, and Equipe revenues are expected to bottom in 2Q99. Management conservatively expects to hold revenues flat for the next two quarters at approximately $30 million (below break-even levels of $36 million), and to ramp revenues modestly in 3Q99 and 4Q99. Over the same period, orders are expected to increase sequentially each quarter, and the book-to-bill ratio is expected to be above 1:1 going forward. The company cites potential factory automation opportunities at 5 new 200mm fabs ($5-20 million ASP), 30 200mm fab upgrades ($10 million ASP), and numerous lithography bay automation opportunities (up to $3-4 million ASP). Management also noted the increased activity at three 300mm pilot lines, which are expected to pull in orders now that complete tool sets are available. PRI's planning software is reportedly receiving favorable reviews from beta test sites, and a tier one customer is expected to place an order soon. Using the Equipe division's Japanese office as a base, PRI Automation is establishing inroads into Japan. We expect the company to begin competing for business in earnest in fiscal 1999. The installation of the PRI's first assembly automation project at Amkor's Philippine facility is now scheduled to take place within the next two quarters. We continue to believe that the drive to reduce manufacturing cost in wafer processing plants will increasingly involve automation. As chip manufacturers begin purchasing capital equipment in volume again, PRI stands to benefit significantly. However, because lead times for the company's products are approximately six months, any significant order improvement in the second half of fiscal 1999 will not be substantially realized until fiscal 2000. lehman.com