That's funny. I was just thinking that we are closer to the top of this upcycle. <G>
Then you wouldn't agree with this "more flawed than usual" analysis from Briefing...
1. AMAT's report coming in Mid May is much more current and forward looking than the backward lookf from a 3 month rolling average for Feb-Mar-Apr.
2. Book to Bill numbers will continue to deteriorate as the Feb and Mar numbers disappear from the rolling average even if we're already at the bottom as long as the recovery isn't steeper than the decline.
12:05 ET ******
Chip Equipment : Preliminary April semiconductor capital equipment book-to-bill came out at 0.42 -- an all time record low level, down from a revised 0.59 in March (preliminary March was 0.64). April was significantly lower than Street consensus of about 0.55. Overall orders decreased an incredible 41% versus March while orders decreased 74% yoy, and 76% from the peak in October. Merrill Lynch points out that this drop has now topped the 70% peak to trough drop in 11 months in 1998 and a 52% peak to trough drop in 9 months in the 1996 downturn.
Shipments saw their first year over year decline since May 1999 and decreased 15% yoy and 17% vs arch....This news is surprisingly bad considering Applied Materials' (AMAT) recent conference call wherein management said that the bottom is in sight and the industry will likely turn upward in the second half of the year, aided largely by seasonally stronger sales of PCs. We recommended the group in a 2/21 Stock Brief as the bottom was in sight. Since then, the data has gotten worse, but the stocks are up strongly. Every month, we ask if this is the bottom? At 0.42, it's a safe bet we are getting very close, and probably just experienced it. Book-to-bill data for June and July could prove to be positive catalysts for the group and would expect a rally on news of an improvement. However, book-to-bill is not the only story as orders are likely to remain weak and low utilization rates are likely to go lower. Given the rally in the group over the past few weeks, we would be cautious in the near term (next month or so), but continue to like the group for long term holders. NVLS, AMAT and KLIC are among our favorites. -- Robert J. Reid, Briefing.com |
