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To: Proud_Infidel who wrote (2803)	4/30/1999 4:41:00 PM
From: Duker	Respond to of 5867

Yeah ... for some reason my connection is sucking wind ... it took me 5 minutes to post the thing ... interesting commentary about leading edge capacity ... I would not use .35M and below as leading edge ... .25M and below is a bit more accurate ... there ain't no room at the inn at those geometries now ... my guess is that, without considerable amounts of more spending, it won't get better next year. --Duker

To: Proud_Infidel who wrote (2803)	4/30/1999 5:06:00 PM
From: Duker	Read Replies (3) \| Respond to of 5867

Random thoughts on TERES ... Here is a product with 70% plus gross margins ... assuming an ASP between $2.3 and $2.5mm (room for aggressive pricing at the outset) and a "typical" order in the 20 unit range ... Herein lies the big swing as we model out the "peak, fully-taxed EPS." If you can get (at some point) to $200mm in TERES on $1.2bn in sales (let me dream) ... assume GM on TERES is 68% (with some price competition from current levels) and the margins on the rest of the business are 45% (on $1bn of etch with reasonable pricing) that gets you to just about 49% corporate gross margins margins. That would be nice. For the sake of argument: $1,200mm x 49% Gross Margin = $588mm Gross Profit Op Expenses Up 9% from last Q's run rate: ($300.5mm) Operating Income: $287.5mm Convert the Convert: Adds shares ... zeroes out Interest Expense ... assume remaining cash earns no interest ... I just do not feel like arguing about the structure of the B/S during the recovery ... Tax @ 33% (some R&D credits): $192.6mm After Tax Round Up Common and Equivalents: 45mm EPS: $4.28 Hmmm. I would think that there are portions of the analysis where I was aggressive and portions where I was conservative ... I think that is a pretty reasonable number to look at ... 15 x's peak gets you to $64 ... 20 x's peak $86 ... The real swing is GMargin driven by the mix of TERES ... you can come up with any number if you play with it a bit ... this is just one permutation ... not terrible to think out there though ... --Duker