Aviza Technology CEO Speaks About His Company

Apr.23.07 | About: Aviza Technology (AVZA)

On April 23, The Wall Street Transcript interviewed Jerry Cutini, President and Chief Executive Officer of Aviza Technology, Inc. (AVZA). Key excerpts follow:

TWST: What is Aviza Technology?

Mr. Cutini: Aviza Technology is a publicly traded semiconductor capital equipment company that designs, manufactures, sells and supports advanced semiconductor capital equipment and process technologies for the global semiconductor industry and related markets. The company's systems are used in a variety of segments of the semiconductor market, such as advanced silicon for memory devices, advanced 3-D packaging and power integrated circuits for communications; and our customers are primarily the global semiconductor producers of integrated circuits. Aviza was formed in a venture-backed buyout of the former Thermal Division of ASM Lithography. In December 2005, the company became public through a merger transaction with Trikon Technologies, a UK-based producer of physical vapor deposition, chemical vapor deposition and etch systems for semiconductor manufacturing and related markets. We recently completed a secondary offering that raised about $30 million for our company and issued over 4 million new shares of stock. As I mentioned, Aviza became a public company through a reverse merger. One of the less favorable aspects of a reverse merger is that we did not have an institutional road show that you would normally have with an IPO, and we really wanted to get out and tell our story to the institutions. In order to attract more institutional ownership of the company, we held a secondary offering that exceeded our expectations and resulted in roughly 60 new institutions invested in Aviza. We intend to use the net proceeds from the offering for working capital, research and development and other general corporate purposes, which may include repaying borrowings. We believe this event has strengthened Aviza's ability to fund the future and our growth.

TWST: Would you preview the new products and new markets for our investor audience?

Mr. Cutini: We have two areas of heavy emphasis inside of Aviza. The first one is Atomic Layer Deposition. This is a new market and a new technique of depositing films on the wafer surface. Literally, it puts the film down one atomic layer at a time. It is a new market in terms of its adoption but it is seen as a critical technology for the future. It's really only in one small subset of the customer base, and we expect over the next three or four years that that market will grow regardless of the cycle in the industry. It has to grow because new customers are adopting it, and this continuous feature size change will demand that people use atomic layer deposition technology at some point in their device manufacturing cycle. So that's a big market focus for us. We have some new machines that we brought out, and so far, we've been penetrating that market successfully, with systems installed in Europe, China, Taiwan and the US. The second part of the market that's interesting for us, and one that is growing, is Wafer Level Packaging. That is the part of the market where they stack chips very closely together in condensed packages for ever-shrinking electronic products like handheld consumer devices. The trend toward increased portability and increased functionality is driving a very different type of packaging technology because existing packaging technologies are reaching limitations. This new form of packaging is where you have to etch all the way through the silicon, the device structure, and then sometimes you stack chips or package them very closely together. SEMI estimates that almost one-third of all devices will incorporate some form of advanced packing by the end of the decade. The market is not quite as big as the atomic layer deposition market, but it's one that we bring great benefits to, and we can provide an integrated solution for the wafer level packaging market to enable our customers to drive those changes for their customers.

TWST: Give us a summary of the financial stature of the company at this point. Are there still items that you're focused on for improvement? Are there any additional items on the agenda for fundraising?

Mr. Cutini: There are no additional plans for fundraising at this time. We had a very specific goal and we achieved our objective. We strengthened the balance sheet by nearly $30 million, some of which we will likely use to pay down or restructure some of our debt. We have some expensive debt related to our property here in California. So we will probably reduce our debt a little bit with the fundraising, and then realign the banks that we've been using with some new debt structure. Going forward, we will continue to work on the profitability in the company and strengthen our overall balance sheet. The primary benefit from the fund-raising was it put some cash on the balance sheet and gives us some flexibility to work with our banks on some of our debt structure. In addition, there was the added benefit of improving the company's stock float, which made us more attractive to the investment community.

TWST: What compels investors to include AVZA not only as part of their current portfolios but also as part of their longer-term investment strategies?

Mr. Cutini: The investors that like a small cap undervalued story are the kind of investors that need to look at Aviza. We are undervalued relative to our peers. We continue to improve our performance financially, and I think that that will give the investors a chance to grow along with Aviza. We've been an under-followed small company, and we've been showing them since we went public in December 2005 that we can execute a well laid-out strategy. So for the investors out there that are looking for small cap stocks that are growing and are increasing profitability, we're probably a stock that they should take a look at because we have a very good institutional following and we're starting to show people the kind of financial performance we can deliver.