For a midsize semiconductor equipment company (or any semi tool concern, for that matter), Aviza Technology had a very busy news week.
The week started with its announcement of a change in auditor accounting firms (yawn), switching from the pricey Deloitte & Touche to the more affordable Armanino McKenna.
Next, Aviza said it had sold its ET Equipment machine shop unit in Wales, hinting at things to come with head honcho Jerry Cutini's mention of the unit not being part of the company's "core expertise."
Yesterday, Aviza had not one, no two, not three, but four pieces of PR hit the wires, starting with the biggest news of the week, the company's plans for a major global restucturing and reducing its DRAM dependency by downsizing its large-batch thermal system business.
Aviza's Cutini seeks decreased
DRAM dependency.
In the official announcement and also during a teleconference held earlier today, Cutini and CFO Patrick O'Connor detailed how Aviza will "refocus its core strategies" on the atomic layer deposition sector for advanced <45 nm logic and on etch and physical vapor deposition (PVD) in the 3-D interconnect, through-silicon via, power device, and MEMS sectors---areas where Cutini believes the company has a competitive advantage and the best opportunities for sustainable growth.
The restructuring includes cutting the workforce by 15%, selling their current facility in Scotts Valley, CA, and moving to a smaller base of operations elsewhere in Silicon Valley, getting out of the DRAM trench capacitor business, and consequently ramping down the batch thermal product line down in most respects (although sales and service on the installed base, and some system upgrades, will continue, and Cutini said there might be a few new machines built over the next few quarters).
One literal cost of refocusing will be a one-time writedown of between $20 million and $24 million, according to O'Connor, which should end up saving the company up to $20 mill annually.
Cutini also mentioned in the telecon that Aviza "will shed more noncore assets in the coming months" as part of the plan. All of the strategic restructuring should help the company reduce its previous breakeven point of $50 million to $55 million (it expects revenues north of $36 million in the current quarter) and get itself "better positioned for profitability."
The boss also expressed enthusiasm for the ALD logic market, expecting revenue from that sector by the end of the year. Most sales in the coming months will come from the etch/PVD product lines. Said Cutini: "That business is definitely growing quarter over quarter and should hang on and do very well" for the rest of the year.
Speaking of those etch/PVD systems, two of Thursday's other three press releases revealed a few details of recent customer deals. Gallium-arsenide chipmaker Anadigics bought more of the tool company's Omega etchers, which the compound semi maker evidently finds exemplary in working on silicon nitride, GaAs backside vias, and other structures. An unnamed Chinese foundry which makes power devices also purchased an Omega fxP platform, which joins an Aviza Sigma fxP PVD tool at the same fab.
The final piece of news is arguably the most troubling: NASDAQ has notified Aviza it could be delisted from the stock exchange if it can't get its share price over a buck for 10 straight days by September 24. During the past year, the company's shares have plummeted from a peak of nearly $9 to a trough of 42 cents on St. Paddy's Day (so much for O'Connor's presence providing any luck o' the Irish on that day!). The stock closed up slightly today (Friday) to 67 cents, so the recent news may have helped a wee bit. As a result of the share-price deterioration, Aviza's market cap has slipped to a measly $14.86 million.
Will the restructuring allow Aviza to survive and prosper, or are Cutini and co.'s efforts just an exercise in ultimate futility, as the business models for small- and medium-sized semi equipment companies come under increasing pressure? Certainly, the volatility and selling-price weakness seen in the DRAM sector--until recently, a major contributor to Aviza's cashflow--has had a detrimental impact on the entire equipment sector, and it shows no concrete signs of letting up this year. By largely exiting the DRAM market, Aviza obviously believes that its future lies elsewhere--and it's fortunate that it has other areas where it believes it can do some competitive damage.
There's a distinct irony in the Aviza story. In pinning much of its future hopes on its high-performance etch/PVD tools, the company plans to increase its MEMS, 3-D, and compound semi business--sectors given little thought until the late 2005 acquisition/merger with what was formerly Trikon. Without those nonthermal assets and technology, Aviza would be in even direr straights than it is now. Any longer-term aspirations for growth and profitability would be seriously in doubt for the company whose prospects seemed so promising when it brought together the pieces (and large installed base) of SVG, Watkins-Johnson, and other pioneering thermal-processing brands under one corporate roof some four-and-a-half years ago.
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Comment by GUEST on 2008-05-08 17:17:55
Rumours of our death have been greatly exaggerated | Comment by GUEST on 2008-04-08 17:10:36
The company going to die
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