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Technology Stocks : Novellus -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (2096)	4/1/1999 12:03:00 PM
From: Dave Chanoux	Read Replies (2) \| Respond to of 3813

I've never been a fan of Lam Research, probably because it doesn't fit my investment objectives. It would offer Novellus a broadened product line into Etch products. Right now Novellus applies films. The end. Other equipment decides where to put the films (Lithographers), takes it off (Etchers) and lots of other process steps. Lam comes with lots of debt. The last report I saw (3/98, not a typo, a year ago) listed $340 Million in debt or about $9 per share. The debt has come in part from acquisitions. Dri-tech is in our area and is one I have a small bit of knowledge with - not well integrated with the west coast operation in my opinion. I would hope there are better candidates for me to end up owning with my NVLS shares. Just my opinion. Regards, Dave Chanoux PS to Steve - you seem to have gotten much more active in options over the past several months. Are you doing ok? Still have that Alcatel (I do)? Dave

To: Steve Fancy who wrote (2096)	4/1/1999 4:15:00 PM
From: Steve Fancy	Respond to of 3813

Novellus, Lam shares surge as analyst sees merger Reuters, Thursday, April 01, 1999 at 15:16 SAN FRANCISCO, April 1 (Reuters) - Shares of two makers of semiconductor equipment, Novellus Systems Inc. (NASDAQ:NVLS) and Lam Research Corp. (NASDAQ:LRCX), surged Thursday after a Merrill Lynch analyst said the two companies are likely merger partners. A spokeswoman for Lam Research said that the company does not comment on rumors or speculation in the market. Novellus officials did not immediately return calls. Shares of Lam jumped $4.50 to $33.50 and Novellus rose $2.50 to $57.625 in active afternoon trading. Mark Fitzgerald, a Merrill Lynch analyst, said on Thursday that a few factors are pointing to a possible deal between the two, one in which Novellus would buy Lam Research. Novellus, based in San Jose, Calif., recently completed the sale of 3.5 million common shares, raising about $300 million, in a financing offering handled by Hambrecht & Quist, he noted. Another factor that could fuel a merger is that Novellus was previously restricted from entering some chip equipment markets as part of a patent litigation settlement with Applied Materials Inc. (NASDAQ:AMAT), the world's biggest maker of chip equipment. "Novellus agreed not to enter into some of Applied's other markets until April 1," Fitzgerald said. "That restriction is off, as of today." Novellus currently makes systems for depositing thin film over insulated silicon wafers, one of the many steps in the complex process of making semiconductors. Lam Research, based in nearby Fremont, Calif., makes etching equipment, which carves out layers to expose the silicon wafer below and is now also involved in the chemical mechanical planarization (CMP) market as a result of an acquisition. The two companies provide separate steps in the semiconductor manufacturing process -- which involves about 12 steps, repeated at different phases of the process -- while Applied Materials provides entire solutions to chip makers. Lam and Novellus are working together to provide more of a complete solution approach through Novellus's new systems using much-vaunted copper technology. "Lam would put them in the etch business," Fitzgerald said. "They have tried to do this several times; the bankers had taken this to the one yard line in January 1997." Fitzgerald said he believed that Novellus could pay up to $40 a share for Lam, and that a deal could happen sooner or later. "I don't have any evidence that this is happening," he said. "I am just looking at the tea leaves." Indeed, last week, SG Cowen & Co analyst Min Pang said that the semiconductor equipment industry was ripe for mergers and that already this year, a record number of deals had occurred. Dan Hutcheson, president of VLSI Research Inc., which tracks the equipment industry, said that the two companies have talked off and on about a merger for about 10 years and that he remains skeptical that they will ever pull off a deal. "I would say that for strategic reasons, it makes sense today more than it ever has in the past because of (Lam's) CMP tool, but I tend to discount it since I have dealt with both companies since their very foundings." Copyright 1999, Reuters News Service