The cycle top is in.
After reviewing many 2Q11 reports, and conf. calls, in semis and semi-equips, I'm now about 80% sure we are at or just past the cycle high for fundamentals. And past the top for stock prices.
The KLIC report is an example of the trend. They reported multi-year record sales (294M$), but warned of sharply lower sales next quarter (165M$).
GAAP EPS for the last 4 reported quarters was $2.48. For comparison, their 2000FY EPS were $1.93. It doesn't get better than this. EPS next quarter will probably be about $0.25 (my guess), compared to $0.95 just reported.
Gross margins peaked at 48% 2 quarters ago, and are now in a downtrend.
On the CC, KLIC refused to give any guidance past September:
...there is no secret here that the industry, the semiconductor industry generally is being cautious. There is a lot of (macroeconomic) factors that are not too preferable right now. I think everybody is taking a [fairly prudent] stance on technical equipment... ...the sequential decline in revenue is really attributed to our ball bonder business and especially from our OSAT customers being more conservative and rescheduling orders...or reducing their capital expenditure plan for the rest of their fiscal year... ...the general sentiment that we can relay in the news is the sentiment of caution from the consumer demand, which is not only in Europe and the US but also in Asia. That's what's driving slowdown in our demand... ...So it's a cyclical business. We all know that...
The sharp fall-off in revenues is not company specific: (from CC)...In wedge bonder, we are basically significantly higher than that and for copper, as I've said many times, we are dominating the space. There is no official data for copper but largely, I mean, we have a very significant market share. We have the best solution available in the market that provides the best cost of ownership for customers and their performance....I wouldn't say sole source but I would say we dominate...
From here on out, I will be shorting semis and semi-equips more aggressively than recently. I'll probably use KLIC as my shorting vehicle, or possibly MU or SNDK. I may also short UAL (airline), NFLX (the bubbly cloud), and/or JPM (big bad bank). It'll be time to go long KLIC and other semi-equips, when QE3 is announced. Wait for it.
Closed my KLIC short today, nicely profitable Message 27552950
Started buying solars today: Message 27552077
disclosure: over 90% cash |
