Semiconductor Capital Equipment (From CSFB Tech Daily)
•The SCE Data Deposition highlights relevant data points in the semi cap equipment industry and their potential impact on companies in our space. Please see our desknote for supporting charts as well as our earnings and catalyst calendars.
•CHRT capex revised down. Chartered Semiconductor (CHRT, $5.34, TP $5.10, Underperform)lowered its 2002 spending outlook 10% from $500 mn to $450 mn. CHRT spent $143 mn in 3Q (up 45% Q/Q) and has spent 65% of its revised forecast YTD – chip companies reporting C3Q02 results to date averaging 68% YTD. Although company is guiding revenue down 20% in 4Q – CHRT could spend to plan as it accepts initial pilot tools at Fab 7. Due to deteriorating momentum into C4Q and capacity utilization still below 40%, we expect flat to down spending in 2003.
•SCE meeting 3Q revenue, guiding down 4Q revenue. 10 companies in our SCE universe have reported 3Q results, posting average 0.9% revenue upside. On average, C4Q street estimates have come down 8.4% and CSFB estimates have come down 4.6% due to increased caution from chip companies to take shipment in-light of muted seasonal demand growth and excess industry capacity. Post the revisions, average street estimate for SCE implies –10% QoQ growth for C4Q.
•SCE missing 3Q and 4Q bookings expectations. SCE bookings are declining faster than revenue, with net bookings falling an average 14% short of our already reduced expectations for 3Q and revised 8% lower than prior expectations for 4Q. Post the revisions, average decline for bookings is –25% for C3Q and –10% for C4Q.
•Expect downward revisions to C4Q bookings, potential bottom in C1Q03. Although stocks are beginning to anticipate an ultimate cyclical recovery, we continue to believe investors are due for disappointment when 2003 capital budgets are released that are below expectations. We maintain our view for a 10% decline in capital spending in 2003 versus street expectations for +10-15%. |
