Semiconductors

1
Semiconductors

• Presented by Aman Bansi
• Mark Thomlinson
• Barnard Choi

2
Agenda

• Industry overview
• Intel
• AMD
• Applied Materials

3
A Brief History

• Pre-1950s - Vacuum tubes
• 1945 - ENIAC is developed for military
  application in WWII
• 1947 - Bell Telephone Laboratories develops the
  transistor
• 1959 - Texas Instruments and Fairchild
  semiconductor separately develop the integrated
  circuit
• 1965 Moores Law
• 1968 Intel founded
• 1970-72 Intel introduces the 4004, and 8008
  processors

4
Terminology

• Semiconductor
• -A material with an electrical conductivity
  between that of an insulator and a conductor
• Behaves as an insulator at very low temperature,
  and conducts electricity at room temperature
• -Silicon, germanium, and gallium arsenide
• Integrated Circuit
• -A thin chip consisting of at least two
  interconnected semiconductor devices

5
Terminology

• Transistor
• -Semiconductor device which can be used for
  amplification, switching, voltage stabilization
• Wafer
• -A thin (1-3mm) slice of a semiconductor ingot
• -The surface on which ICs are manufactured

6
Business Models

• Foundry
• -Manufacturing
• -Taiwan Semiconductor
• Fabless
• -Development and Marketing
• -NEC, hundreds of other firms
• Integrated Device Manufacturer (IDM)
• -Development, Manufacturing, Marketing
• -Intel, AMD

7
Moores Law

• Moores Law states, Number of transistors on
  chip doubles about every two years this has made
  reality by Intel

8
Use of Semiconductors
9
Semiconductor Industry Profile

• U.S. 2003 Sales 80 Billion
• Worldwide 2003 Sales 165 Billion
• of Sales outside U.S.
• Market 73
• Capital Equipment10
• Billion, 14 of sales 14
• R D Investment14
• Billion, 17 of sales 17

10
Global Shipments
11
Sales by Region
12
Global Sales
13
Integrated Circuit Production
14
Capacity by Wafer Size
15
Fabrication process
16
Film Desposition

• Layer of insulating or conducting film is
  deposited or grown on a wafer
• Four main types of deposition
• Atomic Layer Desposition (ALD)
• Chemical Vapour Desposition (CVD)
• Physical Vapour Desposition (PVD)
• Electro Chemical Plating (ECP)

17
Photolithography

• Photolithography
• Etch
• Ion Implantation
• Rapid Thermal Processing

18
Photolithography

• A layer of light sensitive photo resist is
  applied to the previously deposited layer
• A mask (pattern) is placed on top of the photo
  resist
• Ultraviolet light is flashed through the mask,
  dissolving the exposed photo resist

19
Etch

• Process to selectively remove material from the
  surface of a wafer
• The original film which was under the photo
  resist is then dissolved by microscopic droplets
  of chemical
• This process leaves the circuits pattern on the
  wafer

20
Ion Implantation

• Silicon wafers are bombarded by a beam of ions
  that penetrate (implant) the film surface to a
  desired depth
• Used during transistor fabrication to change
  electrical properties of a material
• Important for enabling the fabrication of smaller
  structures with faster transistor performance
• Systems to perform 45 and 65 nm implantation

21
Rapid Thermal Processing

• Rapid bursts of intense heat
• Room temperature to more than 1,000 degrees
  Celsius in seconds
• Used for modifying the properties of the
  implanted ions

22
Chemical Mechanical Polishing

• Removes material from a wafer to create a flat
  surface
• This process allows subsequent photolithography
  patterning steps to occur with greater accuracy
• Enables film layers to build with minimal height
  variations.

23
Metrology and Wafer Inspection

• Scanning Electron Microscopes
• Imaging of critical dimensions
• Determination of defects source
• High speed, laser-based technology

24
Regulatory Environment

• The U.S. government regulates exports and certain
  uses of some types of semiconductors due to their
  potential use in military applications
• Intellectual property laws mainly in the area of
  patents
• Environmental management has become an important
  factor in the production and delivery of
  semiconductor components to end users
• -reduce emission of PFC's

25
Semiconductor Trends

• Cost-per-function of ICs will drop long after
  Moores Law is obsolete, due to various future
  design and fabrication innovations
• As Moore's Law assumptions become less valid,
  something will have to change
• Future area of cost reduction may be
  verification, a major source of bottle neck in IC
  production
• The methods for achieving higher quality and
  lower costs will change

26
Trends (cont.)

• Innovative assembly and packaging of
  multiple-chip modules
• Power-aware design rules
• Design-for-manufacturing (DFM) improvements
• Lithography-friendly tools to enable designers to
  analyze the effects of manufacturing variability
• The integration of physical verification and test
  to enhance debugging and improve yields.
• A learning curve that will tell us what needs to
  happen beyond just shrinking the design rules

27
Growth segments

• High growth application areas for automotive
  semiconductors
• Safety features (airbags, cruise control,
  collision avoidance)
• Cockpit electronics (phones, entertainment)
• Consumer Electronics
• accounts for 50 of the total sales of
  semiconductors
• digital cameras, camcorders, DVD players and CD
  players
• Digital televisions and wireless communication
  equipment with wideband data capability

28
Presented byAman Bansi
29
Agenda

• A Brief history
• Underlying Business
• Management
• Fundamentals
• Financial Analysis
• Quarterly Update
• Financial Ratios
• Value Drivers
• Fisher
• Recommendation

30
Corporate Mission, Values, Objectives

• Our Mission
• -Do a great job for our customers, employees,
  and stockholders by being the preeminent building
  block supplier to the worldwide digital economy
• Our Values
• -Customer Results orientation, risk taking,
  great place to work, quality, discipline
• Our Objectives
• -Extend silicon leadership and manufacturing
  capability, deliver architectural innovation for
  platforms pursue worldwide opportunities

31
A Brief History

• Founded in 1968 by Bob Noyce Gordon Moore to
  build semiconductor memory products
• 1970-1980
• -Introduction of the first microprocessor and
  initial public offering
• -Microprocessor 8080 introduced, 10 times faster
  then previous microprocessors used in the first
  personal computers
• -Intel wins the IBM PC account
• 1980-1990
• -Intel 386 processor launched, 275k transistors
• -Intel enters flash memory business
• -Reincorporated in Delaware

32
Brief History Continued

• 1990-2000
• -Bob Noyce passed away of heart attack
• -Intel becomes household name logo begins
  appearing on PCs world wide
• -Becomes largest semiconductor supplier in the
  world
• -Introduces Pentium processor, 3.1million
  transistors
• -Intel chips power 85 of all desktops
• -Intel celeron processor introduced
• 2000-Present
• -Pentium 4 processor introduced, 42-mill.
  Transistors
• -hyper threading technology is introduced
• -introduced Intel centrino mobile technology

33
Business Segments and Products

• Intel Architecture Business
• -Microprocessors
• -Chipsets
• -Motherboard Products

34
Business Segments and Products Continued

• Intel Communications Group
• -Flash Memory
• -Application Processors Components for
  Handheld Computing Communication Devices
• -Wired Wireless Connectivity Products
• -Networked Storage

35
New Business Segments

• Mobility Group
• Digital Enterprise Group
• Digital Home Group
• Digital Health Group
• Channel Platforms Group

36
Customers

• Original Equipment Manufactures (OEMs) Original
  Design Manufactures (ODMs)
• PC and Network Communication product users
• Other Manufacturers

37
Intel Architecture Business Competitors

• AMD
• IBM
• Hewlett-Packard Company
• Sun Microsystems
• ATI technologies
• Silicon Integrated Systems Corporation (SIS)

38
Intel Communications Group Competitors

• QUALCOMM
• Samsung Electronics Company LTD
• Spansion LLC (subsidiary of AMD)
• Texas Instruments INC
• Applied Micro Circuits
• Atheros Communications

39
Future Growth

• Using Core Strengths for Worldwide Growth
• Manufacturing Technology
• Architecture Platforms
• Ecosystem Development
• -Intel Capital
• Global Presence
• Our Brand
• Corporate Excellence

40
Management

• Craig Barrett, chairman of the Board since May
  2005
• -Previously CEO (1998-2005)
• Paul Otellini, (CEO) since May 2005
• -Previously served as COO President
  (2002-2005)

41
Management Continued

• Andy D. Bryant, Chief Financial Enterprise
  Services Officer
• -Previously CFO (1994-1999)
• Sean Maloney, Executive VP General manager,
  Mobility Group
• -Previously senior vice president (1999-2001)

42
Executive Compensation
43
Executive Options
44
Fundamental

• Trade Date 10-18-05
• TICKER INTC
• Recent Price 25.30
• EPS 1.33
• P-E Ratio 18
• Dividend Yield 1.59
• Annual Dividend .40
• Beta (5-Year) 2.08
• Share Related
• Market Cap (millions) 151509
• Shares Outstanding (millions) 6029

45
One Year Stock Performance
46
Five Year Stock Performance
47
20 Year Stock Performance
48
INTC vs. SOX
49
Financial Analysis
50
(No Transcript)
51
(No Transcript)
52
(No Transcript)
53
(No Transcript)
54
(No Transcript)
55
(No Transcript)
56
(No Transcript)
57
(No Transcript)
58
(No Transcript)
59
(No Transcript)
60
(No Transcript)
61
(No Transcript)
62
Where the Revenue Comes From
63
Selected Financial Data
64
Revenue and Gross Margin
65
Geographic Breakdown
66
Revenue Composition
67
Research and Development
68
Dividend Summary
69
Stock buybacks 2005
Quarter Shares Purchase (mil) Cum. Shares Purchase (mil) Millions Cumulative millions
Q3 93.6 2486.9 2500 49285.7
Q2 98.9 2393.3 2500 46785.7
Q1 107.9 2294.40 2500 44285.7
70
Stock Buybacks 2004
Quarter Shares Purchase (mil) Cum. Shares Purchase (mil) Millions Cumulative millions
Q4 89 2186.50 2000 41785.70
Q3 106.3 2097.50 2500 39785.70
Q2 56 1991.20 1511 37285.7
Q1 49.2 1935.20 1505 35774.70
71
Stock Buyback Announcement 2005

• 25 increase in quarterly dividend payout
  starting in first quarter of 2006
• Board authorized up to 25 billion in shares of
  common stock repurchase

72
Quarterly Update
73
(No Transcript)
74
(No Transcript)
75
(No Transcript)
76
(No Transcript)
77
Revenue Composition up to Q3 2005
78
Financial Ratios
79
Ratios

• Price to Earnings 18
• Return on Equity 19
• Gross Profit margin 57
• Net Profit Margin 21

80
Value Drivers

• Leader world wide in Research and Development
• Cost effective in developing its products
• 18 years of profitability
• Global brand strength
• Unparalleled Industry Commitment

81
Fishers Four Dimensions Analysis

• Superiority in production,marketing, research
  financial skills
• -Intel is a low cost producer making them have
  competitive advantage in the market
• - very good cash position
• -Successful R D in place around the world
• The People Factor
• -Intel has strong people that have been with the
  company for a long time
• -Executive team is not looking to be a leader
  today but for decades to come
• -training programs to help employees develop

82
Fishers Four Dimensions Analysis Contd

• Investment Characteristics of businesses
• -Intel operates quite efficiently that it
  creates barriers to entry
• -fragmented competition
• the price of the investment
• -P/E low
• -seems like there is room to grow in the
  industry

83
Recommendation

• Company proven in the market to be a leader
• Good financial results
• Strong management
• Future growth promising worldwide
• BUY and HOLD

84
AMD

• Advanced Micro Devices
• By Barnard Ki Seong Choi

85
History

• Founded in 1969 by Jerry Sanders with 100,000
  capital
• Engineer and former worldwide marketing director
  at Fairchild Semiconductor
• Goes public in September 1972

86
Executives

• Hector de J. Ruiz, Ph.D.Chairman of the Board,
  President and Chief Executive Officer
• Dr. Bertrand CambouExecutive Vice President and
  President and CEO, Spansion
• Dirk Meyer President COO, Microprocessor
  Solutions Sector
• Iain MorrisSenior Vice President, Personal
  Connectivity Solutions Group
• Bob RivetExecutive Vice President and Chief
  Financial Officer
• The president, top executives in charge of AMDs
  product lines, and the CFO are all outsiders (a
  negative sign according to Fishers people
  factors).

87
Products

• Three product/service categories
• Processors
• Control and computing tasks
• Flash Memory
• Store data and programming instructions
• Connectivity Solutions
• Embedded microprocessors for personal
  connectivity devices and specific consumer markets

88
AMD Market Share
89
AMD Market Share (cont.)

• Dell is now offering 6 Athlon 64 chips on its
  website
• Dell is the last PC maker in the US to
  exclusively use Intel processors
• October, AMD surpasses Intel in U.S. retail
  stores (excludes sales made by direct sellers)
• 49.8 percent of PCs sold in domestic (US) stores
  for the month, compared with Intel's 48.5 percent
  of the market

90
Firm Strategy

• Leverage the strength of AMD64 technology-based
  processors to increase its share of the market,
  especially in the enterprise segment
• Provide customer-driven solutions to high growth
  markets through strategic partnerships and the
  50x15 Initiative (Goal to deliver Internet
  connectivity to 50 of the worlds population by
  2015).
• PIC (Personal Internet Communicator)

91
Regulatory Environment

• Intellectual Property and Licensing
• As of December 26, 2004, more than 6,500 U.S.
  patents and over 2,000 patent applications
  pending in the U.S.
• Patent cross-license agreement with Intel , under
  which AMD pays Intel a royalty for certain
  licensed microprocessor products sold by AMD and
  its affiliates (ends in 2010)
• Environmental Regulation

92
Stock Chart
93
Stock Chart (cont.)
94
Most Recent Information (As of Friday, November
18, 2005)
Last Trade 26.74 Day's Range 26.25 - 26.95
Trade Time Nov-18 52wk Range 14.08 - 26.53
Prev Close 25.89 Volume 16,000,100
Open 26.25 Avg Vol (3m) 10,220,400
1y Target Est 24.39 Market Cap 10.80B
P/E (ttm) 393.24
EPS (ttm) 0.07
Div Yield N/A (N/A)
95
Sales Segmentation
96
Sales Segmentation (cont.)
Product Lines Sales Operating Income
Processors 2527.7 303
Memory 2342.5 35
Connectivity 131.22 -72
Other 0 -44

(millions of dollars)
97
Balance Sheet

• Price/Book (mrq)3.35
• Total Cash (mrq)1.34B
• Total Cash Per Share (mrq)3.322
• Total Debt (mrq)2.01B
• Total Debt/Equity (mrq)0.676
• Current Ratio (mrq)1.565

98
Income Statement
99
Cash Flow Statement

• PERIOD ENDING 26-Dec-04
  28-Dec-03 29-Dec-02
• Operating cash flow
  1,086,521   295,586   (88,910)
• Financing cash flow
  _ (74,447)    75,727
• Investing cash flow
  (1,555,784) 83,183   (854,389)

100
Executive Options Outstanding (End of 2004)
Exercise price of shares (000s) Weighted Average Years Remaining
0.01 9.56 14609 5.41
9.57 14.64 15842 7.21
14.65 15.5 14653 6.5
15.55 45.5 8580 6.03
0.01 45.5 53684 6.34
101
Value Drivers

• RD / speed of innovation
• The ability to adjust to post-Moores Law era and
  to continue the innovation process will be key
  to determining company value

102
Valuation

• AMD has negative FCFE
• No dividend payout
• P/E ratio 393 (current)
• Share price has increased nearly nine times since
  its low in late 2002

103
Recommendation

• SELL
• Stock chart shows that the stock is at a 4 year
  high
• Share price has increased 8 times from its 2002
  lows
• Uncertainty in the world after Moores Law
• AMD has very low profitability
• Intel is a formidable competitor
• Low industry growth forecast
• Top Management is mostly composed of outsiders

104
APPLIED MATERIALS

• THINK IT

• BUILD IT

• SCALE IT

• APPLY IT

• Presented by Marc Tomlinson

105
Current Stock Information

• Symbol AMAT
• Exchange NASDAQ
• 52 Week Range 14.33 18.60
• Current Price 17.14
• Shares Outstanding 1.62 B
• Market Capitalization 27.81B
• Average Daily Volume 20.8M
• Dividend Yield .12 (.7)
• Dividend Date December 8, 2005

106
Profile

• Largest supplier of machines and services to the
  semiconductor industry
• Dedicated to innovation to bring manufacturing
  technology to customer who manufacture the
  worlds most advanced chips
• 13,000 employees in 65 offices throughout the
  world
• The company that makes the systems that make the
  chips that change the world

107
Corporate Mission and Goal

• Mission Statement
• To be the leading supplier of semiconductor
  fabrication solutions worldwidethrough
  innovation and enhancement of customer
  productivity with systems and service solutions
• Goal
• Our customers' business results come first

108
Key Executives

• James C. Morgan
• Chairman
• Company Service
• Chairman of the Board of Directors since 1987
• CEO from 1977 to April 2003.
• President from 1976 to 1987
• Michael R. Splinter
• President, CEO and Director
• Company Service
• President and CEO Since April 30, 2003
• Prior Service
• 20 years with Intel
• Executive Vice President and Director of Sales
  and Marketing
• General Manager of Technology and Manufacturing

109
Key Executives

• Nancy H. Handel
• Group Vice President and Chief Financial Officer
• Company Service
• Joined the company in 1985
• Group VP and CFO since 2004.
• Group VP, Deputy CFO and Controller since 2000
• Franz Janker  
• Senior Vice President, Sales and Marketing
• Company Service
• Joined the company in 1982
• Senior VP of Sales and Marketing since May 2003
• Senior VP of Global Operations and Corporate
  Marketing in 2002

110
A Brief History

• 1967
• Applied is founded by Michael McNeilly
• 1972
• Initial public offering
• 1977
• James Morgan becomes CEO

111
A Brief History

• 1979-1991
• Expansion throughout Asia
• 1992
• Applied becomes the worlds largest equipment
  manufacturer
• 1997-2004
• 12 acquisitions solidify position and expand
  product offerings

112
One Year Stock Performance
113
AMAT vs. SOX and SP
114
Five Year Stock Performance
115
AMAT vs. SOX and SP
116
20 Year Stock Performance
117
AMAT vs. SOX and SP
118
Platform Portfolio

• Endura

• Centura

119
Platform Portfolio

• Vantage

• Producer

120
Process Portfolio

• Film desposition
• Photolithography
• Photolithography
• Etching
• Ion Implantation
• Rapid Thermal Processing
• Chemical Mechanical Planarization (CMP)
• Metrology and Wafer Inspection
• Mask Making
• Flat Panel Displays
• Factory Software

121
Factory Software

• FAB300
• MES designed specifically for 300mm wafer
  facilities
• Provides superior tool automation and
  factory-wide process automation
• Applied WorkStream
• Provides real-time information and proven factory
  control

122
Flat Panel Displays

• Produced by Applieds subsidiary AKT
• Similar manufacturing process for semiconductors
• Difference is the size of the display
• Systems for substrates
• of up to 2.2 meters

123
Key Customers

• Texas Instruments
• Intel
• IBM
• Motorola (Freescale)
• AMD
• Taiwan semiconductor
• Samsung
• LG Philips
• Sharp
• Toshiba
• Note No single customer accounts for more
• than 10 of Applieds revenue

124
Major Competitors

• Largest competitors
• 44 smaller, niche market firms
• Market Cap of 3.6M to 1.9B

Company Ticker Mkt Cap Sales GM (M) RD (M) FCF (Est) ROE P/E P / BV
Tokyo Electron 8035JP 9.6 B 5.0 B 1,380 N/A 950 18.6 13.3 3.4
Tencor KLAC 9.8 B 2.1 B 1,220 340 350 14.6 23.5 3.1
LAM LRCX 5.1 B 1.5 B 764 194 366 26.3 20.7 4.5
Novellus NVLS 3.3 B 1.4 B 665 252 -154 6.7 26.4 1.7
Teradyne TER 2.7 B 1.8 B 723 262 -38 -12.0 N/A 2.6
125
Tokyo Electron

• Second largest equipment supplier
• Mirrors Applieds product line
• Including flat panel displays
• Distributes other companys products in Japan
• Including chips, boards, and software
• Countries Japan, USA, Korea, Taiwan, UK

126
Tencor

• Product Focus
• Yield management systems
• CMP
• Etch
• Films
• Lithography

127
LAM Research

• Product Focus
• Etch
• Cleaning systems
• 72 of sales are from Asia

128
Novellus

• Product Focus
• Deposition
• Physical vapor deposition (PVD)
• Electrochemical deposition (ECD)
• Interconnect
• process

129
Teradyne

• Product Focus
• Automatic test equipment
• Industries
• Broadband Internet and VOIP
• Military and Aerospace
• Semiconductors
• Automotive

130
Competitor Summary

• Applied is the dominant, complete process
  supplier
• Strong competition from niche suppliers
• Yield management (Tencor)
• Desposition (Novellus)
• Etching (LAM)
• Regional competition in Asia
• Tokyo Electron, LAM Research
• Competition from Teradyne in growth segments
• Automotive, Internet

131
Annual Financial Statement Analysis

• Compensation and Options
• Income Statement
• Balance Sheet
• Cash Flow Statement

132
Executive Compensation
  Type of Compensation Type of Compensation Type of Compensation Type of Compensation Type of Compensation Type of Compensation
    Annual   Long Term Long Term Other
  Year Salary Bonus Stock Awards Options  
James C. Morgan 2004 445,000 0 0 0 9,225
    Chairman 2003 684,615 0 0 600,000 9,000
  2002 854,058 0 0 400,000 9,000
Michael R. Splinter 2004 900,000 5,000,000 0 1,100,000 47,846
    President and CEO 2003 443,077 0 4,125,000 1,200,000 2,077
Franz Janker 2004 433,127 1,097,717 0 340,000 9,225
    Executive VP, Sales and Marketing 2003 419,799 50,000 0 295,000 9,000
  2002 332,508 90,000 0 0 9,000
Nancy H. Handel 2004 324,106 596,030 0 210,000 9,225
    Senior VP and CFO 2003 304,161 54,774 0 100,000 9,000
  2002 296,993 0 0 0 8,500
Joseph R. Bronson 2004 550,000 0 0 405,000 9,225
    Former Executive VP and CFO 2003 550,000 0 0 360,000 9,000
  2002 516,347 0 0 240,000 9,000
133
Options Exercised and Granted
Name Shares Acquired Realized Value Number of Securities Underlying Unexercised Options Number of Securities Underlying Unexercised Options Value of In-the-Money Options Value of In-the-Money Options
      Exercisable Unexerciseable Exercisable Unexerciseable
James Morgan 960,000 15,870,784 1,920,000 1,400,000 288,000 718,000
Michael Splinter 0 0 300,000 2,000,000 114,000 342,000
Franz Janker 108,000 1,501,319 430,000 775,000 905,218 400,750
Nancy Handel 60,000 763,770 371,000 425,000 581,796 36,050
Joseph Bronson 225,000 1,980,813 1,000,000 0 72,000 0
      Value at Expiration Assuming Annual Rates of Stock Appreciation Value at Expiration Assuming Annual Rates of Stock Appreciation
Employee Number of Options of Total Granted Exercise Price Expiration Date 5 10
James Morgan 0 N/A N/A N/A 0 0
Michael Splinter 1,100,000 2.97 22.45 12/08/2010 10,053,340 23,428,570
Franz Janker 340,000 0.92 23.74 11/17/10 3,285,964 7,657,650
Nancy Handel 210,000 0.57 23.74 11/17/10 2,029,566 4,729,725
Joseph Bronson 405,000 1.09 22.45 12/08/2010 N/A N/A
134
Outstanding Options
135
(No Transcript)
136
Income Statement Highlights
137
New Orders, Sales, GP, Net Income
138
Regional Sales Growth
139
2004 Regional Sales
140
RD as a Percent of Sales
141
(No Transcript)
142
Balance Sheet Highlights
143
(No Transcript)
144
Cash Flow Statement Highlights
145
Key Ratios
146
10-Q Analysis

• Income Statement
• Balance Sheet
• Statement of Cash Flows

147
(No Transcript)
148
(No Transcript)
149
(No Transcript)
150
Value Drivers

• High RD investment
• Derived demand
• Full systems supplier
• Economies of scale
• Geographic reach

151
Valuation

• Inputs
• K rf BE (rp) 17.8
• Where
• rf 4 , BE 2.3 , rp 6
• g 12
• FCF 1,465
• Number of Shares 1.62B
• P0 (1,465 B)(1 g) / (.178 - .12) / 1.62 B
• 17.46

152
Fishers Opinion

• Superiority in production, marketing, research,
  and financial skills
• Strong cash position, low debt
• Track record of innovation
• Global sales force
• The people factor
• Many veterans, with some new faces

153
Fishers Opinion

• Investment characteristics
• Barriers to entry
• Strong niche competitors
• Competition is fragmented overall
• Diversified customer base
• Price
• Fairly valued

154
Recommendation

• Pros
• Industry leader
• Solid financial position
• Innovative
• In general, long term management

• Cons
• Excessive management compensation
• Applieds size may limit future, abnormal growth
• Anti trust laws
• Internal growth
• Sales driven by highly cyclical demand

• H O L D