STOCKREPORTS

Electroglas, Inc.

Nasdaq Symbol EGLS

Recent Price 25.63 52 Wk Range 25.63 - 12.31

Yield Nil 12-Mo. P/E 34.6

Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) 4+ Fair Value 26.50 Risk HIGH Earn/Div Rank NR
Technical Evaluation: BULLISH since 05/97 Rel. Strength Rank (1 Lowest - 99 Highest) 94 Insider Activity Neutral

Overview 16-MAY-97

We have lowered our 1997 revenues and earnings estimates for EGLS, as the company will not recover from the current slump in the semiconductor equipment industry as quickly as we believed. However, with orders firming and backlog rising, results should soon begin to show improvement. Although revenues will improve sequentially through 1997, difficult year-to-year comparisons in the first half of the year will lead to an approximate 15% to 20% decline in revenues from 1996 levels. Margins will narrow, on the lower volume, the ramping up of EGLS's newest prober, the 4090, and the costs of EGLS's commitment to maintain R&D spending despite the lower revenues. Interest income generated from the company's healthy cash balances will give some stability to results. In addition, a stock repurchase program will aid earnings comparisons. Excluding an extraordinary charge to be taken in the second quarter related to a pending acquisition, we look for EPS to decline to $0.40 from 1996's $1.36.

Valuation 16-MAY-97

Although we have lowered our 1997 EPS estimate, we still recommend accumulation of the shares. Although the 1997 earnings outlook for the company is not favorable, the long-term picture is brighter. EGLS is one of only three wafer-prober suppliers in the world. In addition, as IC complexity increases, longer test times per die are required, and therefore more probers are needed to maintain the same throughput. The new 4090 prober is receiving a favorable reception, and it accounted for 27% of first quarter sales. The company's cash balance of over $7.00 a share offers some downside protection, should the earnings recovery take longer than anticipated.

Key Stock Statistics

Fiscal Year Ending Dec. 31

Dividend Data: EGLS intends to retain earnings for use in its business and does not expect to pay cash dividends in the foreseeable future. A two-for-one stock split was effected in December 1995.

Business Summary 16-MAY-97

Electroglas, Inc. operates in a niche market in the rapidly growing semiconductor equipment industry: the manufacturing of automatic wafer probing equipment. The total worldwide market for wafer probing equipment is less than $400 million, and the company has only two major competitors: Tokyo Electron Labs and Tokyo Seimitsu.

There are several elements to the company's strategy. These include a focus on technological innovation, as the company has invested heavily in engineering, research and development to add features and functionality to its products. Electroglas also seeks to maintain strong customer relationships, with the company working close to its customers to determine their needs and specifications. To enhance its future growth, EGLS plans to increase its focus on the Japanese market, which has been difficult for EGLS to penetrate. In addition, EGLS seeks to expand its product offerings through new internally developed products and strategic alliances and acquisitions.

Semiconductor devices are fabricated by repeating a complex series of process steps on a wafer substrate, usually made of silicon and measuring three to eight inches in diameter. A wafer prober successfully positions each integrated circuit on a wafer so that the electrical contact points on the finished wafer align under and make contact with the probe pins, which are located on a probe card mounted on the wafer prober.

Parametric testing is performed during the wafer fabrication process ("in-line"), at the completion of the wafer fabrication process while the individual ICs are still intact on the wafer ("end-of-line"), and after the completion of the cutting and packaging of individual ICs ("wafer sort"), to identify ICs which do not conform to specifications. EGLS's probers are used for in-line and end-of-line testing.

The company's primary product lines are the 2000 series and Horizon 4000 wafer probers. The older 2000 Series products are used primarily for wafers whose diameters are six inches and less. The Horizon 4000 Series products, used primarily for eight inch wafers, consists of four models: the Horizon 4060X, which features wafer sizing, noncontact wafer realign, single wafer load and quick load stations and a robotic transfer mechanism; the Horizon 4080X Automatic Prober, targeted at high-volume semiconductor production lines of eight-inch wafers; and the Horizon 4085X Automatic Prober, developed to meet the exacting standards required for probing high-pin-count advanced logic devices; and the Horizon 4090, which was introduced in 1996.

EGLS is developing a range of software products named SORTnet, which is to be used for the management and control of data gained udring the test process.

Capitalization

Long Term Debt: None (3/97).

Curr. Ratio	7.6	5.4	5.6	3.2	1.8	1.6	NA	NA	NA	NA
% LT Debt of Cap.	NM	NM	Nil	Nil	Nil	Nil	Nil	Nil	Nil	NA
% Net Inc.of Revs.	16.1	22.0	19.9	18.5	8.0	11.6	13.7	15.5	15.4	NA
% Ret. on Assets	12.6	22.9	22.4	NM	20.7	16.3	44.5	50.0	NA	NA
% Ret. on Equity	14.8	27.7	27.7	NM	NM	NM	NM	NM	NM	NA

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--2901 Coronado Dr., Santa Clara, CA 95054. Tel--(408) 727-6500. Website--http://www.electroglas.com Chrmn --N. R. Bonke. CEO--C. S. Wozniak. VP-Fin, CFO, Treas, Secy & Investor Contact--Armand J. Stegall. Dirs--N. R. Bonke, J. Dox, R. D. Emerick, R. J. Frankenberg, C. Wozniak. Transfer Agent & Registrar--Boston Equiserve LP. Incorporated--in Delaware in 1993. Empl-- 607. S&P Analyst: Stephen T. Madonna

This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997