Cabot Microelectronics loses ground on warning

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Shares of semiconductor supply maker Cabot Microelectronics slumped on its second-quarter revenue warning, which the company blamed on a slowdown in customer orders. Analysts cut estimates but maintained their respective ratings.

The company's stock lost $10.13, almost 17 percent, to $49.88 in trading on Tuesday. Cabot Microelectronic (Nasdaq: CCMP) shares have been on a roller coaster in the past year, trading as high as $110.13 and as low as $22 in the past 52 weeks.

The company supplies slurries used in chemical mechanical planarization, a polishing process used in the manufacture of integrated circuit devices.

After market close on Monday, the Aurora, Ill.-based company said its revenue for the second quarter would decrease sequentially. CEO Matthew Neville, who was also elected chairman of the company's board on Tuesday, said revenue for the period would be 40 percent to 45 percent higher than the $39 million seen in the second quarter of 2000, but would fall 15 percent to 20 percent short of first-quarter 2001 revenue of $68.6 million.

"On Jan. 29, we indicated that the effects of the weakening economy, chip inventory increases in our customers' end market applications and lower demand for our customers' end market products were expected to have a short-term effect on our business," Neville said. "Along with our customers and peers, we are now experiencing these effects."

The company also said it expects to meet its fiscal 2001 revenue growth target of more than 50 percent, and it sees earnings for the year at 16 percent to 18 percent of revenue.

First Call analysts' consensus calls for earnings of $2.18 a share on revenue of $282 million for fiscal year 2001.

Analysts reacted by lowering estimates but maintained their respective ratings.

At UBS Warburg, the stock was reiterated a "strong buy" by analyst J Jeffrey Cianci. The company's earnings were cut to $1.85 a share from $2.15 for fiscal 2001, while 2002 earnings numbers were lowered to $2.50 a share from $2.75 a share. The company's price target was also slashed to $80 from $90.

The outlook was similar at Robertson Stephens, where analyst Susan H. Billat maintained a "buy" rating on the stock. Earnings estimates for fiscal 2001 were brought down from $2.29 a share to $1.90 a share.

Analyst Gil Yang at Salomon Smith Barney, who also slashed estimates, still believes the company can achieve its top-line growth number of 50 percent year-over-year, but said that growth will continue to decelerate over the next three successive quarters. The analyst reiterated a "3H" rating on the stock.