Ahem...reversal up or down? Given the past month, I'm not sure what you're suggesting...<sg>
Re: BTB...this is from today's MF--
FOOL PLATE SPECIAL
An Investment Opinion by Randy Befumo
Hit by a SEMI
The optimistic consensus that had projected demand for semiconductor capital equipment rising uninterrupted through the year 2000 hit a bump in the road yesterday. Semiconductor Equipment and Materials International(SEMI) reported yesterday that the North American semiconductor industry posted a book-to-bill ratio of 1.07 for the month of September. Although the book-to-bill ratio connotes that there were more bookings than billings, the book-to-bill results have been tumbling sequentially. SEMI revised August's book-to-bill down to 1.09, which itself is a drop from the 1.12 figure reported for July. Investors reacted by hosing semiconductor capital equipment manufacturers for the second day in a row today, taking shares of most of the major manufacturers down more than 5%.
Although the Semiconductor Industry Association (SIA) stopped publishing the often confusing book-to-bill number for the semiconductor industry last year, the semiconductor capital equipment industry's trade organization still publishes this indicator. The haphazard comparison of bookings to billings is used by many to gauge how strong demand is in the short term. If there are a $1.07 in bookings for every $1.00 in billings, this indicates that the absolute dollar amount of equipment ordered has increased versus what is being shipped. However, this does not specify unit volume and is a number that apparently only applies to North America. Given that Japan is the second-largest equipment market in the world and that it was East Asian demand that kept many semiconductor capital equipment manufacturers from losing money in 1996, this would seem that the book-to-bill number is curiously limited.
Looking at the press release, absolute bookings have increased by 5.4% per month. Taken on an annual basis, this means that revenues across the board are rising at an 89.8% annualized rate. Revenues in September versus August alone were up 6.2%, a 105.9% annualized rate that is clearly not sustainable. Share prices have doubled and tripled for most of these companies so far this year because of this strong performance, but much like in late 1995, it appears that the euphoria has gotten the better of many investors. The SEMI trade organization has stated a number of times that it sees "difficult" times for the business until the year 2000. Today's slump seems to be driven by previously unrealistic expectations being revised in the face of an almost inevitable slowdown in the pace of demand.
APPLIED MATERIALS (Nasdaq: AMAT) (N) (S) fell $2 7/8 to $41 3/8; KLA-TENCOR (Nasdaq: KLAC) (N) (S) was off $2 3/8 to $59 7/8;TERADYNE (NYSE: TER) (N) (S) slumped $3 1/8 to $52 9/16; ASE TEST (Nasdaq: ASTSF) (N) (S) dropped $3 1/2 to $65 1/4; and other semiconductor equipment and equipment component manufacturers also were down on the news.
At least there is some optimism in this report/analysis!
Fred |
