Gottfried,
Old hands know this but newer semi equipment investors may not yet know that going strictly by PE won't work with these stocks because they're cyclical.
Thats true, to be successful you have to get in sync with the cycle.<gg> I put a different time frame on the AMAT chart you referenced - took it all the way back for 10 years. In 1995 and 1997, the rise in PE preceded the stock price rise, just like in 1999, but the magnitude was not as great. From the chart, it looks like the present PE is similar in value to other periods in AMAT history when waiting for a rise in price. The question is - when will the future become clear that better times are ahead. Right now the "visibility" seems to be about zero.
ORCL in the middle of February said that the "future" looked OK, then just last week(about 2 weeks later), Ellison came out and said he couldn't tell when his customer CEOs would place orders - they were in a "wait and see" mode. We have heard countless companies lately saying essentially the same thing - we can't project the future business outlook.
After the close Friday, CYMI released lower guidance for the upcoming year.
biz.yahoo.com
A couple of comments from the article:
Fab utilization rates have fallen to the 70 percent range and are likely to decline further, and semiconductor manufacturers continue to announce reduced capital spending plans. Therefore, we are now estimating a revenue and income decline in the current quarter from levels achieved in the fourth quarter of 2000. In addition, we expect further sequential quarterly declines in revenue and income to occur before we will see a return to quarterly growth.
and
``We are seeing the direct effects of falling fab utilization rates in lower demand for our consumables, which is a turns business within each quarter. With two-thirds of our first quarter 2001 now past, we are forecasting that the consumables part of our business will be down 20 percent to 25 percent from the fourth quarter of 2000. On the system side, we are currently estimating that the install rate of lithography equipment at chipmakers is not sufficient to reduce inventories of our light sources at lithography tool manufacturers to desired levels given the current environment. Therefore, in consultation with our customers, we are further reducing new system shipments to them in this year's first quarter, and are taking appropriate actions to further reduce costs in light of the revenue decline. Because of these factors, we now expect Cymer's financial results to be lower in the first quarter of this year compared to the fourth quarter of 2000, and lower in the full year 2001 than in 2000.''
We are now at the beginning of March. During the last 2 months we have been hearing about how things were going to "turn around" by the 2nd half of this year. CYMI is one of the first I have heard to indicate that 2001 is going to be less than 2000. Unless these CEOs that Ellison was talking about decide to move out in the relatively near future and place their orders, more and more companies like CYMI will probably have the same projections for 2001.
Don
Don |
