Semiconductor Equipment . . . Kulicke & Soffa reported fiscal first quarter results that exceeded expectations due to better than expected December order activity, resulting from increased demand for wire bonders. The net loss for the quarter ending December was $17.7 million, or 36 cents a share, in line with year-earlier losses. Revenue rose 8 percent to $103.2 million. Analysts had been expecting losses of 44 cents a share and revenue of $99.9 million.
The preliminary December semiconductor capital equipment book-to-bill for the US equipment companies came out at 0.98, up from the revised ratio of 0.80 in November (preliminary was 0.79). The ratio was above our 0.85 estimate due to sharply lower billings. Overall orders were up 8% month-to-month (M/M), slightly greater than the 7% average seasonal growth in December over the last 12 years. The order increase was offset by a 13% M/M billings decline, well below the flat M/M normal pattern for December of the last 12 years. The drop was due to the large number of fab shutdowns in December, limiting the ability to deliver equipment. The front-end process equipment (Applied Materials, Novellus, Lam Research, Kulicke & Soffa etc.) faired relatively better, growing 9%, after bottoming in Oct-Nov. This is in line with our industry checks, indicating 5-10% order growth beginning over the last month or so. The back-end test and assembly equipment (Teradyne, Kulicke & Soffa etc.) orders have basically been flat for the last five months, increasing 2% in December. Back-end sales declined for the third month in a row as the seasonally slow second half of December resulted in fewer installs. The US fab utilization data for December also came out recently at 66.7%. The ratio has essentially been stagnant at 66%-67% for the last 6 months. Historically, semiconductor equipment tracks fab utilization and does not rise until 3-4 months after utilization increases. Data supports our stabilization, slow upturn thesis. As always, look at orders and utilization rate as the key indicators, with the book-to-bill ratio being a coincident indicator with stock prices. Continued flat utilization with about in-line seasonal order trend points towards a slow return to growth for semiconductor capital equipment. IC unit volumes must rise for this to continue, make the best bets unit driven companies.
Semiconductors . . . The Financial Times reports that Intel president and COO Paul Otellini sold nearly two-thirds of his stake in the co last week, according to an SEC filing released yesterday.
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