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Entegris: Bringing Integrity to Microchips

There are three IPOs planned for this week. Unfortunately, not all are expected to have great performances. Then again, it is a holiday week. Expect next week to be much better.

Sometimes slow weeks can bring some interesting IPO plays. One is called Entegris. The company provides materials management services to the semiconductor and disk manufacturing marketplaces. Entegris assures the integrity of the materials as they pass through many phases (handling, storage, processing, and transportation). For example, wafer processing can take more than 500 steps and six weeks to complete. If a batch of 25 wafers is lost, the cost can be more than $1 million.

As for the IPO, Entegris plans to issue 13 million shares between the price range of $13-$15. The lead underwriter is Merrill Lynch.

Entegris is not a scrappy start-up; rather, it has been in business for about 34 years. During this time, the company has become a leading player in its industry.

In all, the company has eleven worldwide manufacturing facilities. In other words, Entergris can meet the manufacturing needs of many companies. Customers include IBM, Infineon, Intel, Seagate and Texas Instruments, as well as over 1,000 others.

The company does face serious competition. These companies include Asyst Technologies, Kakizaki, Sanga Flantek, and Dainichi -- just to name a few.

Interesting enough, Entegris has a 26.8% ownership stake in Metron (semiconductor distributor), which had its IPO late last year. Although the valuation is not huge: $165 million.

The semiconductor industry is subject to wide swings. In sympathy, Entegris has also undergone the swings. But recently the semiconductor industry has been surging. This has been very beneficial to Entegris. Sales increased from $172 million for the first nine months of fiscal year 1999 to $247 million in the first nine months of fiscal year 2000. During this time, net income went from $2.5 million to $35 million.

Such profitability, as well as the strength of semiconductors, may give a boost to the Entegris IPO. It probably wont be a surge, but it may be a fairly respectable jump.



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