Axcelis Technologies Incorporated (NASDAQ: ACLS)

Axcelis Technologies Inc. (ACLS) is a designer and manufacturer of semiconductor equipment, marketing its ion implantation, dry strip and other processing equipment products worldwide. The Company also provides support, spare parts, equipment upgrades and maintenance services to its customers.

Founded in 1995, the Company is headquartered in Beverly, Massachusetts.

Source: Reuters.com, SEC Filings.

Financial Summary

Source: Reuters.com, SEC Filings.

Analyst Consensus

The mean of two analysts polled by Thomson Reuters rate shares of ACLS a “Hold.”

Analyst Recommendations and Revisions

Source: Reuters.com, SEC Filings.

Investment Highlights

The Company operates in an industry subject to cyclical swings and trends by makers of semiconductors. Demand for its products is influenced by capital spending, capacity and utilization rates of semiconductor manufacturers and technology advancement. As a result, the Company expects its revenue and earnings to fluctuate during the various cycles of the semiconductor makers industry. The second half of 2007 marks the period when the industry began to slow, and is expected to continue through 2009, according to management’s assessment in its latest 10-Q.

Company gross margins are substantially affected by the introduction of new products, with margins increasing as products mature in the life cycle. The Company’s costs are predominately fixed, not varying along with fluctuating revenue. Operating income and margin, therefore, will fluctuate along with revenue volume, which is contingent upon industry cycles of the semiconductor manufacturing industry.

Third-quarter financial results

On November 5, the Company reported its third-quarter results of $35.0 million of revenue, compared with $33.6 from the prior quarter. Net loss decreased for the third quarter to $15.9 million, or a loss of 15 cents per share, compared with a loss of $22.4 million, or a loss of 22 cents per share, reported for the second quarter. The Company reported a net loss of $24.7 million, or a loss of 24 cents per share, from the same period last year. Revenue for the third quarter last year reached $46.5 million. The Company reported that the market favored the purchase of single-wafer high-current product, affecting the Company which offers mostly multi-wafer tool products. The Company introduced a single wafer Optima XE in 2008 and 2009, but the Optima has not yet fully infiltrated the market.

For the period ended September 30, 2009, the Company operated at a negative cash flow predominately driven by the decline in demand for semiconductors. Cash and cash equivalents reached $41.2 million at the close of the third quarter, compared with $49.8 million at the close of the second quarter, while the Company’s cash burn rate between quarters reached $8.5 million. The Company expects cash flow to improved markedly during the fourth quarter of 2009.

The Company’s liquidity is affected by several factors, including the health of the overall semiconductor industry and global economy, availability of credit, and the sales of its Optima product line. Management anticipates modest improvement in the industry for the remainder of 2009 and calendar year 2010. Given this forecast, management expects its cash position will be sufficient through 2009 and subsequent years. Although funding sources have been difficult, the Company continues to explore its options.

Technical Analysis

ACLS trades above its 13-day moving average. This bullish sign is significant because the stock has maintained its bullish pattern.

The MACD for ACLS currently indicates a bearish signal, but appears to soon become bullish if the share price of ACLS remains stable at this level. The MACD is below the signal line, a 9-day moving average of the MACD. The MACD is below the critical level of 0, which implies the past price action had been negative. Overall, the chart is bullish.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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