FOOL PLATE SPECIAL
An Investment Opinion by Alex Schay

Cymer Cheaper -- Another Analyst Sends It Down

Morgan Stanley Dean Witter held the line bravely, reporting as late as September 8 that the excimer laser company it helped bring public, CYMER INC. (Nasdaq: CYMI), was still a "strong buy." Since that time, the leading producer of excimer laser illumination sources for deep-ultraviolet (deep UV or DUV) photolithography systems used in manufacturing semiconductors has been rocked by speculation that it is experiencing problems with its massive production ramp-up to accommodate an industry-wide shift to 0.25-micron chips. This morning Morgan Stanley Dean Witter finally broke ranks and joined other defectors such as Montgomery Securities, which had downgraded the company from a "buy" to a "hold" on Monday. Since the "strong buy" reiteration by Morgan earlier this month, Cymer's share price has been cut 13% -- until today, when Morgan finally issued a downgrade to "neutral" from "strong buy," sending the stock into a tailspin, fa
lling $4 to $26.

This is one of the few times investors will see a stock get cheaper and suddenly become less attractive. Cymer has been a stellar performer over the past couple of months, announcing a two-for-one share split on August 7. The hand wringing began earlier this month when the company pulled out of an appearance at a Needham & Co. semiconductor equipment conference. The company issued a press release on the matter stating that it had received "same day" notification of a potential development "that could have affected the company's near term financial performance." Understandably, if the company had a potential problem on its hands, it couldn't very well report that everything was rosy. Senior vice president and chief financial officer William Angus later commented that the issue "had been resolved," but noted that the company had to make "s
ome adjustments in [its] operating plans for the remainder of the quarter," adding that the development "creates more risk." Uh oh, bad move, mention "risk" and investors flee, as evidenced by the 18% drop in the stock price the day of the announcement.

The Montgomery downgrade came as a result of analyst Brett Hodess expressing concerns that "technical problems at (customers) Nikon and Canon could cause further push backs in laser orders." Cymer provides lasers used in semiconductor production that companies need to integrate into their manufacturing processes, but Cymer denied the analyst's assertion, stating there is "nothing to support the theory there are manufacturing problems." Details surrounding today's downgrade by Morgan Stanley have yet to be released. Ultimately, statements from Cymer that fundamental market forces driving chipmaker demand for DUV lithography tools remaining strong should be weighed against the possibility of an inventory fluctuation occurring at Cymer as a result of capacity meeting demand. A natural progression in the company's business cycle would be a situation in which it is finally meeting demand (after ramping up capacity enormously), which would subsequently result
in normalized ordering from customers that no longer feel the need to "overorder" to insure that they get what they need.

UPS

Online auction and direct marketing company ONSALE INC. (Nasdaq: ONSL) rose $1 15/16 to $29 9/16 on signing a marketing agreement with Computer Shopper NetBuyer from ZDNet.

UK bank NATIONAL WESTMINSTER BANK (NYSE: NW) jumped $7 to $90 1/2 in a strong London market, which gained ground on a Financial Times report that Great Britain will join the European Monetary Union, a move that former Conservative Party Prime Ministers had opposed. The UK's largest bank, BARCLAYS PLC (NYSE: BCS) also gained $6 3/8 to $107 5/8 on the report.

Biopharmaceutical products company IMMUNEX (Nasdaq: IMNX) rose $5 3/8 to $65 1/8 after announcing an agreement with pharmaceutical company AMERICAN HOME PRODUCTS (NYSE: AHP) to promote Immunex's treatment for rheumatoid arthritis, under which Immunex will receive up to $100 million in milestone payments.

CREATIVE TECHNOLOGY (Nasdaq: CREAF) gained $2 to $25 15/16 after Goldman Sachs upgraded the maker of SoundBlaster sound cards and multimedia cards for PCs to "trading buy" from "market outperform."

Software tool maker COGNOS INC. (Nasdaq: COGNF) rebounded $1 31/32 to $24 after yesterday reporting Q1 earnings and guiding revenue growth estimates for the second quarter down to the 20-25% range.

FEDERAL MOGUL CORP. (NYSE: FMO) rose $2 5/16 to $35 13/16 after the auto parts manufacturer confirmed that it has made a $37.72 per share offer to acquire T&N plc, a British "automotive components and engineering group."

DOWNS

BIOCRYST PHARMACEUTICALS (Nasdaq: BCRX) lost $3 1/2 to $6 after Phase III trials of the company's topical cream for "cutaneous T-cell lymphoma and... psoriasis showed 'no statistical differences' between those treated with the BCX-34 cream and placebo groups."

Local area networking (LAN) support provider company TECHFORCE CORP. (Nasdaq: TFRC) slid $3 1/8 to $8 on announcing that it will miss Q3 and full year 1997 earnings estimates because of lower hardware sales, increased operating expenses, and expenses the company will incur to exit its FedEx repair business.

Semiconductor maker BENCHMARQ MICROELECTRONICS (Nasdaq: BMRQ) was taken down $8 3/4 to $24 3/4 after the company said it expects a 10% sequential decline in revenues and earnings due to lower sales of its nonvolatile SRAM products.

OACIS HEALTHCARE HOLDINGS CORP. (Nasdaq: OCIS) dropped $1 1/8 to $7 1/4 after BT Alex. Brown lowered its rating on the clinical information systems company to "market perform" from "buy."

Machine tool manufacturer BRIDGEPORT MACHINES (Nasdaq: BPTM) fell $1 1/4 to $10 1/4 after warning that it expects to report a loss of $0.12 to $0.18 per share in its second quarter due to poor European market conditions.

TRIMBLE NAVIGATION LTD. (Nasdaq: TRMB) fell $1 15/16 to $18 15/16 after the maker of global positioning system receivers warned of a delay in shipments to the U.S. military due to slower-than-expected testing and review for its Cargo Utility products.

Programmable logic device company LATTICE SEMICONDUCTOR (Nasdaq: LSCC) slid $4 5/8 to $64 3/4 after UBS Securities lowered its rating on the company to "hold" from "buy" based on the analyst's belief that the market is soft for its products and on valuation of the shares.

PLUMA INC. (NYSE: PLU) was sheared for a $3 5/16 loss to $10 1/16 after the maker of fleece activewear announced that it is expecting flat year-over-year Q3 revenues and EPS as low as $0.20, missing the mean First Call estimate of $0.51.

British/Dutch publishing and information services company REED INTERNATIONAL PLC (NYSE: RUK) dropped $4 7/8 to $33 7/8 after revealing "irregularities" at its Reed Travel Group unit. The company will also take a "substantial writedown" of intangible assets at its travel group, according to Reuters.

CONFERENCE CALLS

COREL CORPORATION (Nasdaq: COSFF)
(416) 626-4100 (code: 633413) -- replay

CABLETRON SYSTEMS (NYSE: CS)
(402) 220-4881 -- replay through 9/29

COGNOS INC. (Nasdaq: COGNF)
(800) 997-6906 -- replay through 9/30

09/30/97 (Tuesday)
CANANDAIGUA BRANDS, INC. (Nasdaq: CBRNA)
(800) 964-3296 -- replay through 10/2

THIS WEEK'S CONFERENCE CALL SYNOPSES

3COM (Nasdaq: COMS) Call
MICRON ELECTRONICS (Nasdaq: MUEI) Call
MICRON TECHNOLOGY (NYSE: MU) Call

FOOL PORTFOLIO                  BORING PORTFOLIO

AMZN up $7/16 at $49 3/8        ATLS down $1/8 at $27 3/4
AOL down $9/16 at $72 3/8       BGP up $7/16 at $29 7/16
ATCT down $3/16 at $5           CSCO up $5/16 at $73 3/16
CHV up $5/8 at $83 5/16         CSL down $1/8 at $44 3/4
COMS up $1/2 at $50 3/4         GNT up $1/4 at $46 13/16
DJT down $5/16 at $10 3/8       ORCL down $1/4 at $38
GM up $1 1/16 at $66 3/16       OXHP up $1 11/16 at $76 5/8
INVX dn $1/16 at $32 15/16      PMSI up $3/16 at $14 11/16
IOM up $1/16 at $26 1/8         TDW down $5/16 at $58 11/16
KLAC down $2 1/2 at $70
LU up $3/16 at $80 5/16
MMM up $2 7/16 at $90 1/4
T up $1 3/16 at $45 3/4