GENUS, INC. METRON TECHNOLOGY

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Hello Readers,

Since the last issue, we closed one position for a very nice gain.

CRYO-CELL INTERNATIONAL (5/5/03). Closed position 6/22/04 at $1.88 for a 71% GAIN.

Soon after we recommended CCEL just over a year ago, the stock got banged because of shareholder lawsuits that can be considered of questionable intent, and, as a result, the stock lingered despite the company’s promising outlook. Then, as we said last issue, President Reagan died and interest in stem cell research went bonkers. At over 70% gain, it was time to close CRYO-CELL.

Here we are, midway through 2004 and the markets seem to have less direction now than at the beginning of the year. What the markets are now attempting is to interpret the latest “Fed Speak” and decide how negative another rate hike will be in August. Also, hanging over our heads is the spectre of domestic terrorism as the November election draws closer. And, the most important question is who will win? The good news for Bush and perhaps the markets is that he is liked about as much as Kerry. The next few months look to be a little choppy and sloppy, but we still feel the long-term prospects for the market are pretty encouraging.

Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.

DOR BioPharma (DOR) (3/20/00). DOR and Thomas Jefferson Univ. collaborate with U.S Army to advance development of botulinum toxin vaccines. And yes, after four years, we have tired of this longest-running Current Position and may soon again place it on the “Endangered List”.

Genetronics (GEB) (10/5/00). Awarded two patents for trans-surface and ex-vivo applications of electroporation therapy.

Arotech (ARTX) (6/5/01). Establishes European HQ to expand reach into non-U.S. markets. Subsidiary delivers 26 Armored Land Rover Defenders. Company’s zinc-air battery named one of the US Army’s “great inventions of the year”.

ViroLogic (VLGC) (7/20/01). Awarded $1.5 million grant to fund large scale clinical studies evaluating replication capacity as a predictive tool for the clinical management of HIV.

VASCO Security (VDSI) (2/5/02). Launches Digipass plug-in for RACF. Soleil Securities initiates coverage on stock.

Generex (GNBT) (8/5/02). Announces letter of intent with Sejong for a joint venture and licensing arrangement for Oralin in India, China, and Australia. Presents potential uses of RapidMist technology at conference.

Art Technology (ARTG) (8/5/03). Beefs up analytics with Coremetrics partnership. Enhances customer experience platform.

Targeted Genetics (TGEN) (10/5/03). Interim analysis support continuation of company’s Phase 2b cystic fibrosis clinical trial. TGEN subsidiary CellExSys, Inc. merges with Chromos, Inc. Files with SEC to sell up to 16.3 million shares, which may be a drag on the stock for a while.

V.I. Technologies (VITX) (11/20/03). Panacos to present Phase 1 data on its lead HIV-1 drug candidate.

AVANT Immuno (AVAN) (12/5/03). Gets mention in WSJ Online. Expands senior management team. Presents at biotech forum. Selected as New England Business and Technology awards finalists.

Actuate (ACTU) (1/5/04). Stock jumps on nice plug in Barron’s. ACTU and Tsinghua Univ. sign MOU to collaborate on BI Software Research. Stock upgraded by Pacific Growth Equities. Several releases on product advances.

Analysts Intl (ANLY) (2/5/04). Discloses restricted stock award. Names new CEO and other top management changes.

OpenTV (OPTV) (3/20/04). Announces multi-year deal to offer hotel gaming services to Quadriga Worldwide. On Command partners with OPTV’s Betting Corp to introduce new interactive games to hotels.

Socket Communications (SCKT) (3/20/04). Windows and .NET Magazine names Socket’s cordless hand scanner Best of TechEd Europe 2004 Awards finalist.

NexMed (NEXM) (4/5/04). Initiates 400 patient Femprox study overseas. Raises over $8.27 million.

Palatin (PTN) (4/5/04). Company’s PT-141 drug may offer aphrodisiac for women.

AVI BioPharma (AVII) (4/20/04). Terminates cardiovascular pact with Medtronic and regains full exclusive rights to develop Resten-NG. To receive $10 million in defense-related funding from U.S. for two of its infectious disease projects.

GoRemote (GRIC) (5/5/04). Signs reciprocal pact with SOFTBANK BB. Forms alliance with Toshiba to boost mobile productivity. Neopost selects company’s total security protection platform.

GlowPoint (GLOW) (5/20/04). Enters arbitration with Gores Technology Group.

Network Engines (NENG) (6/5/04). Launches V2.5 of steel-belted radius appliance.

BindView (BVEW) (6/5/04). Expands Directory Administration solutions. Adds UNIX and Linus support to compliance center.

Altair Nanotechnology (ALTI) (6/20/04). Provides shareholder update. Gets grant from U.S. National Science Foundation. Awarded first European patent.

Zi Corp (ZICA) (6/20/04). Retains Paradigm Capital to assist in fund raising.

Our picks for this issue are two more semiconductors, so to speak, both on NASDAQ.

GENUS, INC. (NASDAQ: GGNS) – $3.40. Twelve-month hi-low has been $7.50 – $2.11. Based in Sunnyvale, CA, with about 150 employees, this supplier to the semiconductor industry has 39.7 million shares outstanding, $53.48 million in total current assets, $63 million in total assets, and $14.94 million in total liabilities, of which $5.97 million is long-term debt. Institutional ownership is around 26%. Two analysts rate the stock a “moderate buy” and two have it as a “hold”. http://www.genus.com

In case some of you haven’t noticed, we have been lightly stocking up on companies affiliated with the semiconductor industry. Genus, Inc., with a good-looking balance sheet, is another one worth eye-balling since it is also expanding into nanotechnology.

Founded in 1981 and public nearly 14 years, Genus supplies capital equipment and deposition processes for advanced semiconductor manufacturing. The company offers various thin film deposition modules with its own production platform – the LYNX2 for 200mm wafers and, more recently, the LYNX3 for 300mm wafers. These are incorporated into a variety of products such as personal computers, communications equipment, and consumer electronics.

Genus’ systems develop chemical vapor deposition (CVD) tungsten silicide that is used in manufacturing integrated circuits, or chips, and, incidentally, this has been the company’s core business. However, it is Genus’ nanotechnology, ALD (atomic layer deposition), that is gaining attention. ALD promises future geometries that continue to shrink in both the semiconductor world and other industries. It is designed to enable a spectrum of thin film applications, such as aluminum oxide, hafnium oxide, and other insulating and conducting materials.

Back in April, Genus bagged its first ALD customer in Taiwan from one of the world’s largest semiconductor foundries. A lot of the world’s chip making is done in Taiwan, which may be one reason why the PRC is anxious to annex that island. Also, in April, the company guided below analysts’ revenue expectations, which probably put pressure on the stock.

For FY2003, ending 12/31/03, revenue was $56.86 million with $3.52 million in net losses compared to FY02 revenue of $39.76 and $11.62 million in net losses. During the 1stQT of this FY, ending 3/31/03, revenue was $12.2 million with $1.68 million in net losses.

We still feel that semiconductors are recovering better than is perceived, and that small companies like Genus should share in future windfalls.

Our 24-month target for the stock is $5.25 to $6.50.

For more information, call GGNS at 408-747-7120.

METRON TECHNOLOGY N.V. (NASDAQ: MTCH) – $2.43. Twelve-month hi-low has been $5.20 – $1.98. Located in San Jose, CA, with about 720 employees, this provider to the semiconductor industry has 12.8 million shares outstanding, $99.74 million in total current assets, $129.2 million in total assets, and $81.32 million in total liabilities, of which $9.8 million is long-term debt. Institutional ownership is around 26%.http://investor.metrontech.com

And again, we add yet another company affiliated with the semiconductor sector to the Current Portfolio. With its healthy-looking balance sheet Metron Technology N.V. may be worth a shot.

Founded in 1975 and public since 1999, Metron focuses on bringing outsourcing alternatives to semiconductor materials and equipment providers by providing marketing, sales, manufacturing, service, and support solutions. Metron, which claims to provide the only global outsource solution to the industry, offers material of over 10,000 items including gas and fluid handling components, high purity chemicals and cleanroom products. In the equipment area the company offers equipment for cleaning wafers, microlithography equipment, photomask inspection and repair equipment, and inspection and defect characterization equipment.

Metron’s primary customers are semiconductor manufacturing fabs and the company focuses on the critical, non-core functions of the fab. Metron provides these semiconductor fabs the ability to streamline their supply chain by offering its products portfolio from one source. Operating through subsidiaries in the U.S., Europe, and Asia, Metron’s principal suppliers include Entegris, Fujikin, Pall Corporation, SII Nanotechnology, and Carl Zeiss.

In May, Metron entered into a subscription agreement for a private placement of $6 million of convertible debentures.

For FY2003, ending 5/31/03, revenue was $235.6 million with $26.7 million in net losses versus FY2002 revenue of $232.2 million and $2.77 million in net losses. During the first nine months of FY2004, ending 2/29/04, revenues are $143.7 million with $16.8 million in losses.

The stock is down for the simple reason that revenues have slumped, but, if our instincts are right about the semis in general, Metron could see a turnaround.

Our 24-month target for the stock is $4.50 to $5.00.

For more information, contact MTCH at 408-719-4600; info@metrontech.com

Look for the July 20, 2004 issue to be posted on 7/16 or 7/19.

Happy 4th!
George