Cymer, a maker of lasers used to produce computer chips, said yesterday that first-quarter net income rose to $20.6 million, a 283 percent increase over the same quarter last year.
The San Diego company, considered a bellwether to the semiconductor industry, posted earnings of 52 cents a share, compared with 14 cents a share for the first quarter 2005. Revenue rose 50 percent to $127 million.
Cymer's strong results may indicate that the notoriously cyclical semiconductor industry is gaining momentum.
The industry has been sending mixed signals about demand, and some Wall Street analysts – who've been burned in the past in predicting a turnaround – have been cautious about forecasting the direction of the industry.
Analysts following Cymer, for example, were expecting earnings of 42 cents per share on sales of $120.4 million, according to a poll by Thomson Financial.
For Cymer's part, it has benefited from an increase in demand from chip makers that produce semiconductors for consumer products.
Chief Executive Bob Akins said more than half the semiconductors produced today are used in devices such as iPods and laptop computers. In past years, the bulk of chips went into network equipment and other behind-the-scenes gear.
“The consumer trend is one that there's no stopping now,” Akins said. “Consumers are fickle, yet when they find a product that's compelling they rush to buy it.”
Cymer's lasers help create the tiny patterns on silicon that eventually direct the flow of electricity on the chip.
Each complex system is expensive, with an average selling price in the first quarter of $970,000.
Cymer maintains an 80 percent worldwide market share for lasers used in semiconductor production.
The company predicted that its strong showing would continue at least through the next quarter. It expects revenue to jump 5 to 10 percent over the first quarter.
The company's results represent one of the stronger signals to date of the rebounding chip market, said Bud Leedom, publisher of the California Stock Report.
“There have been anecdotal things out there about some fabs cutting back,” Leedom said. “There have been some pockets of weakness. But what Cymer is indicating is, if you're working on next-generation chips, if you're providing equipment for that, there's significant demand from manufacturers and from fabs.”
Patrick Ho, an analyst with Stifel Nicolaus, said semiconductor companies that make memory chips have seen demand rise, and Cymer is a major supplier to those companies.
“One of the higher growth areas – and one where Cymer is well-exposed – is the flash memory market” for consumer devices such as MP3 players and iPods, Ho said.
Orders for future equipment rose to $135.57 million, the highest quarterly level in the company's history and a 13 percent increase over the prior quarter.
Cymer released results after the markets closed. Its shares ended yesterday up $1.34 at $49.45. But they surged in early after-hours trading, gaining $3.65, or 7 percent, to $53.10.
Mike Freeman: (760) 476-8209; mike.freeman@uniontrib.com
