<<I know Scott finally turned bearish on the stock at about that time so it certainly shows that he watches the situation well.>>
It's just SOOOOOOOOOOOOOOOOOO tempting.
Here is the tempting response:
Yes, RtS, about 3 weeks ago I noticed specific order pattern discontinuities between my multi-factorial algorithm-based bonder utilization rates and the pricing factorial derivatives of 300 mm implementation scheduling. The user facilitation manifest of these advanced high tolerance and low I/O deposition polymers suggest an attenuation of fab run-time in SE Asian houses thus redefining diminishment of spec-based procurement through the period approximating Arbor-week celebrations in Lithuania.*
Now for my honest response:
My bearishness and selling of KLIC had absolutely nothing to do with 'watching the situation well' but rather a) needing some cash towards a new business (nursery/greenhouse) and b) after 5-6 years with KLIC, just getting exhausted with the volatility and uncertainty. And don't forget, I sold at a price 5-10% BELOW the current level - yes, below the post-yesterday haircut.
The most disturbing thing about Friday's CC was the news that the 'older' bonders were selling at an equal level with the new Maxums. This was not the impression investors were given a couple months ago (that the high-margin Maxums would be the bulk of sales). This is troublesome because even if sales do pick-up again, the anticipated revenues from the Maxums won't be nearly as robust.
The question is if this is a company-specific event or if we're hearing the canary once again. The action on Friday suggests investors believe this is indeesd company-specific. I would caution equipment investors that the historical record shows 1) this is the typical short term response and 2) it is an extremely imprudent response.
Scott Kulicke's outlook suggests that (as I said 3 weeks ago, by coincidence) the entire industry may have a difficult summer/early fall and the stocks may not go anywhere anytime soon. In addition, the reluctance to upgrade to the Maxum bonder MAY imply that the idea that there would be a industry-wide technology upgrade (as opposed to a capacity upgrade), which would drive part or most of the next cycle, may not materialize...or won't happen at a level any where that anticipated.
I recall with clarity the announcement of order delays and pushouts by KLIC in August, 2000. While not exactly 'heralding' the greatest-ever contraction in industry - stocks were already well off their highs - it was, in hindsight, the beginning of the severe stage of order diminution that only recently has begun to reverse. Investors then, as they appear to be doing now, classified KLIC's problems as company specific. Within 2-3 months every other stock in the sector had crashed as well.
My best advice is to remind folks that KLIC has not lost its status as a harbinger for the industry. The odds strongly favor that the 'company-specific' events at KLIC are a readout for the entire sector...and KLIC's significant underperformance this year ( siliconinvestor.com ) will soon be matched by the rest of the sector.
And keep in mind that those rosy BtB numbers are based on an order level far, FAR below peak order levels over the past 5+ years. In fact, the current level of order activity in the industry, when compared to the last 5-8 years, would still be considered 'depressed'...and the outlook for demand does not inspire a great deal of confidence.
IMO, in the wake of yesterday's KLIC's CC locking in some gains now may be the prudent approach towards the equipment stocks at this moment in history.
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*Any correlation between the words in that paragraph and the real world are purely coincidental. Consider it a 'stream-of-consciousness' analysis of the equipment industry...with words being placed next to each other as they are randomly accessed.......at 7:00 on a Saturday morning. |
