Hi Don and thank you for posting your tables, data and opinions!
The numbers in your recent tables show an easy to comprehend, visual representation of the semi market cycles.
Here are a few statistics which are drawn from your billings/bookings/btb tables. Note: these numbers haven't been double checked so it's very possible I'm making a mistake or 2.
Bookings declined 53% by Sep 96 from the previous peak and by Oct 97 were only 8.7% higher than the previous peak. By Sept 98, bookings declined 73% from the Oct 97 high. The rebound was tremendous, peaking 63% higher than the Oct 97 high and over 500% from the washout Sept 98 low!!
Billings declined by 24.6% by Feb 97 from the May 96 peak. By Oct 97, billings had rebounded 31% over the previous peak (May 96) and they were up over 74% from the Feb 97 low. 16 months later, by Feb 99 billings were off 52% from the Oct 97 peak and by Oct 00, billings had increased 43.5% over the Oct 97 peak.
Using your BTB table, by Sept 96 the BTB had fallen 50% from 1.41 in Feb 95 to .7, a rebound to 1.15 in May 97 holding fairly steady through Jul 97 (1.12) then a crash down to .56/.57 by Aug/Sep 98 (we all remember the Asian crisis...). A sharp rebound by March 99 to 1.33, a slight drop to 1.07 by Sept 99 and a nice move to 1.46 by Mar 00.
Using the billings data, one might assume that the statistical drop during this cycle should be somewhere between the 24% and 52% seen in the previous 2 cycles. However, if one uses the bookings data, which I would suggest is a better 'timing mechanism', the drops were 53% and 73% from the peaks. This suggests that bookings could drop in the 1406 to 808 range during this downturn!! A scary proposition if you are invested in this area at the moment.
While no two cycles will ever be the same (and I believe there is more demand for semi's then ever before), the above data provide an eye opening view of the possibilities.
If the past 2 cycles are useful for predicting the future, I would suggest buying into semiconductor companies after bookings show a significant rebound off of a low (see Nov/Dec 98, Sep/Oct 96). It will be very interesting to see how quickly and deeply the BTB drops during the next 2 or 3 months!
Michael |
