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Brooks Automation, Inc. Message Board

  • kmac43 kmac43 Jul 15, 1998 10:21 PM Flag

    What a price!

    Maybe I'm wrong. Maybe BRKS has no future? That
    is what the
    market is saying based on the
    valuation given the stock. Try
    to find a stock that you
    can buy for less than working capital
    per share.
    It is very difficult to do. Sure, things in the

    semi equipment sector are tough now. May be awhile
    before it
    gets better. And yes, I expect them to lose
    money for the next
    two quarters. Expect a small
    inventory writedown too. However, I think the current
    valuation of BRKS more than accounts for the tough times
    ahead. Today, the market cap fell to $100
    million.
    Working capital totals $107 million. Sell the inventory,
    collect
    the Accounts receivable, pay the short term debt, and
    then
    distribute all the cash and you have $10 a
    share cash to give
    shareholders. The company and its
    products (hardware, software,
    intellectual property,
    patents, etc.) are all free.
    Only ASYT looks better to
    me!

    I said a few months ago that this stock
    would never fall to $10 because it would then have to
    ignore the $80 million that
    the company picked up in
    issuing stock in 1997. Well, I was
    wrong. The market
    did ignore it. So you had better research it
    on
    your own. Maybe I am missing something.
    Comments?

    Kmac43

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    • I only disagreed about one
      sentence

      >>My best guess is to ride it down but I'm not
      sure.

      After today, maybe we've turned the corner at
      last.

      BTW, Its OK if you don't work for them. I was just
      trying to figure out where they fit into the market vis
      a vis PRIA (don't own yet) and ASYT (own a
      boatload).

      regards

    • ASYT is a broader based company. Their overlap
      with Brooks right now is with the components that Hine
      Design brings to market. Brooks specialty is cluster
      tool systems which is not Hine Designs forte nor
      ASYT's. Front ends are more where ASYT is going. Brooks
      needs to be there for a total system solution but that
      is a slightly diff. market.

      If you wanted an
      economic justification, I cannot give it to you. I have
      just given a small amount of market data as I see it.
      I don't see a problem, with the price of BBKS this
      low, of having a share in both companies. I don't
      think (my opinion only) you'll lose money over the long
      haul. It just may take awhile as the market for both
      sucks.


      roboto_san

    • Hi Roboto_san:

      Thanks for the insights. I
      would like to have a more direct question. If we
      compare the valuations and market positions between ASYT
      and BRKS, it looks like ASYT is a better place to
      invest. Why should someone buy BRKS ? The reason for my
      asking is that I am holding ASYT and am looking to
      diversify, and PRIA does not look too attractive in terms of
      valuations, and BRKS seems to be closer to
      ASYT.

      Thanks again for your insight (as well as others')

    • Have been wondering what to do with my tech
      stocks. My best guess is to ride it down but I'm not
      sure.
      As for flat panel equipment... nobody's made money,
      that I have seen, on that line. Brooks was into a
      pretty heavy development of it but I don't work in FP so
      I'm not sure what kind of sales they have had.
      As
      far as ASYT/Hine Design, we'll see. Nothing looked
      that impressive at Semicon. I would be more worried
      about the PRI/Equipe merger. If they ever get their
      acts together, they will continue to pick up ex-Brooks
      customers because they have adopted ControlWorks as one of
      their system software solutions. Too bad their vacuum
      robots are so gawdawful.
      Lam uses a number of vendors
      on their various platforms. He who has the best
      equipment at the best price will get designed in.
      Brooks
      should be looking at atmospheric robot vendors for a
      natural fit. Front ends seem to be the way to go in the
      future.
      BTW - I don't work for Brooks.

      roboto_san

    • I had not considered that.
      It would be logical
      to me... lots of free cash out there. I would think
      they would have to consider the financial impact of a
      couple of more high priced development projects before
      they went and spent it though.

      roboto_san

    • thanks for sharing your knowledge. Watching the
      deterioration in price of BRKS I can't help but to suspect that
      management may be considering some sort of share buy-back,
      especially if they keep costs under control and come close
      to breaking even this quarter. They have a pretty
      healthy cash position and a 2 mill share buyback would
      make a big difference to the botom line in come
      quarters.

      regards

    • Also, to prove the adage that "no good deed is
      left unpunished" I have a few more questions.

      I
      was curious if you had opinions about how (if?) the
      Asyst aquisition of Hines impacts Brooks in any way.
      (I'd never heard o Hines before, but I noticed LRCX
      was Hines largest customer, same as BRKS)


      Also, are there any logical acquisitions that BRKS
      could make or logical extensions to the product line? I
      know that they have a flat panel display line, but it
      hasn't seemed to take off yet.

      THanks in advance
      for your willingness to share your knowledge. Am
      looking to average down during the selling squall that
      IMHO will continue today.

      regards

      ejm

    • 1.) Brooks has three issues that will hurt
      it.
      A. The business plan has a flaw in it. Customers
      will use Brooks to build development systems (alpha,
      beta, pilot production) then get rid of them when it's
      time to go to full production as a cost saving
      measure.
      B. Tied in with A, the level of support from Brooks
      is generally not well thought of. Therefore when
      it's time for customers to build their own systems,
      there is not much brand loyalty.
      C. By switching
      from ControlWorks to Brooks Canada, they lost a lot of
      people who were sold on the CW system. Torqued a lot of
      people off.

      Now there is one issue that hurts
      Brooks that of course is not their doing. 300mm wafer is
      really lagging in the development stage. A couple of
      years off is what I heard at Semicon. Well there goes
      most of your new sales, and Brooks has a lot of money
      tied up in 300mm development.

      So the good
      news....
      Engineering staff at Brooks is probably the finest in the
      industry. Engineering to production transitions seem to be
      very well done at minimal cost. Brooks' cost
      management is a little shakey in that the returns on
      investment are pretty poor in an industry where they had
      virtual monopoly.
      Product line... not as cutting edge
      as they use to be. Better than most robotics out
      there. Price advantages are not there. Customers are
      looking for price breaks even if it means a slightly
      inferior product. I mean at 10 million cycles between
      failures (the advertised failure rate for the Mag 7 robot)
      it's 17 years of average life time before a robot
      breaks down. Seen much fab equipment requiring that kind
      of reliability?

      Hope that
      helps...

      roboto_san

    • I purchased BRKS today at the close at the strong
      recommendation of my broker at Merrill Lynch. It is currently
      priced far below book value and has limited downside and
      great upside potential. Hope he is right.

    • roboto san,

      what's your opinion of BRKS' propsects going forward? How would you rate their r&d, engineering, and product line? Thanks

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