ML:bck-end orders were up 2% seq, reversing the 10% decline
Semiconductor Capital Equipment - Analysis of Monthly Book to Bill Results (Brett Hodess 415-676-3518) 8/23/00
• The semiconductor capital equipment book-to-bill for the US preliminary results came out at 1.23 down slightly from a revised 1.27
in June. The ratio declined more from acceleration in shipments than from slowing orders. Further, June’s results showed a notable
upward revision in front-end numbers. Overall orders grew 2% sequentially and 91% year over year, an acceleration over the last 2
months. Shipment growth was steady at 5% sequentially and 73% year over year.
• Front-end Apploed Materials (AMAT, $82; C-2-1-9), KLA Tencor (KLAC, $56; C-2-1-9) , Lam Research (LRCX, $28; D-2-1-9)
Novellus (NVLS, $57; D-1-1-9) orders were strongest up 3% month to month for a decrease in book-to-bill from 1.32 to 1.29. Front-end
orders year-over-year growth rates also increased from 88% in June to 103% in July. Back-end Teradyne (TER, $64; D-1-1-9)
Kulicke & Sofia (KLIC, $18; D-1-2-9), Credence Systems (CMOS, Rvw) orders were up 2% sequentially, reversing the 10% decline
seen in June. Book-to-bill decreased from 1.10 to 1.08 on strong shipments.
• June Front-end bookings and shipments were both revised upwards by 2.74% and 2.14% respectively. Since July represents the third
month of Applied Materials fiscal third quarter, we suspect that July’s numbers will see upward revisions. A slowing in overall order
rates has been well expected, as month-to-month and y-o-y comparisons have become much more difficult. Investors should be aware
that the absolute trend of orders is a much stronger indicator of stock direction than changes in growth rates. The stocks have taken a
significant correction with the average P/E dropping to l6x 2001 from the peak of 30x at the end of the first quarter. We believe this
presents a buying opportunity as the outlook is for continued order growth in the second half and beyond. |
