Using SEMI's numbers, bookings will be down around 35% yoy and billings will be down about 30%. The declines have been substantial, if not staggering. Looking at Don's tables for the group and the SOX show the price declines have been even more negative for stock prices when compared to SEMI's data.
More pronounced stock prices are to be expected. Every percent in lost sales gets translated into several percentage drop in earnings and vice versa. Earnings/share determine the stock price, not sales! Also, lower sales affects more than just earnings/share for most companies. It affects their B/S in a way that makes you question whether they can survive a severe downturn!
At some point the market will begin to look past the downturn and into the future rebound.
Sure, but how can one even think about this when revenue and earnings estimates are still being revised downwards for buyers of semiconductor equipment?
Let us know if and when you think the worst case has been factored into SCE stock prices. We are getting pretty close, imo. No hurry to rush into these stocks, thats for sure. If a rebound in the sector is in the cards for 2010, we should expect to see the stocks anticipate this by about 9 months. With this in mind, we are getting closer to the buying opportunity for the next boom phase but not quite there, imo.
This depends on what kind of investment philosophy you have. A value investor will probably get in much earlier than a momentum investor and will also exit much earlier, etc. In any case, and this is just my opinion, it is a bit premature to take positions in SCE companies until their big customers are healthy and profitable. |
