Axcelis Technologies Inc (ACLS)

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Axcelis shares fall 22 percent on profit margin worries
Boston Business Journal - by Tim McLaughlin
Date: Wednesday, February 2, 2011, 12:03pm EST - Last Modified: Wednesday, February 2, 2011, 2:44pm EST
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Shares of Axcelis Technologies Inc. (Nasdaq: ACLS) plunged 22 percent Wednesday after the Beverly, Mass.-based maker of semiconductor equipment offered a profit forecast that disappointed some analysts.

Axcelis shares were down 80 cents, or 22 percent, to $2.79 in Wednesday afternoon trading. Trading volume approached 5 million shares, or more than triple the 3-month average.

On Tuesday, the company reported net income of $4.3 million for the fourth quarter, getting help from a one-time boost from a tax benefit. That compared with a net loss of $6.3 million in the preceding 3-month period.

Revenue in the fourth quarter surged 24 percent to $93.4 million over the prior three months. And the company ended 2010 with nearly $161 million in working capital.

But during a conference call with analysts Tuesday evening, Axcelis CEO Mary Puma said the company still needs to work on expanding its profit margins.

“We anticipate being profitable throughout 2011, and generating strong, positive cash flow,” Puma said on the conference call. “We believe that demand for semiconductor equipment will remain robust throughout the year.”

Puma said she expects year-over-year organic revenue growth in excess of 30 percent. She also expects market share gains.

Gross margins at Axcelis in the fourth quarter were 34 percent. Analysts, however, indicated during the conference call they’d like to see those margins rise above 40 percent, given the company’s revenue expansion.

“You’ve done a fabulous job of … crushing it on the top line, but the leverage on the bottom line is not been as spectacular,” said Christian Schwab, an analyst at Craig-Hallum Capital Group.

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