I am reposting the following from the KLIC Thread on Yahoo...
Makes sense to me huh?
I've been lurking on this thread recently and after reading some of the posts I was motivated to pride
some commentary.
1. For those who have recently joined, welcome, for those of you who joined and who own the stock, I
feel bad for you. For those who have joined, own the stock and don't know what KLIC does you are
not that bright.
2. Back end as it is sometimes known is also referred to as Assembly,Package & Test due to the fact
that it follows the chip
manufacturing process which originates with the front end equipment makers like AMAT and KLAC.
Semi mfg. is a complex series of events and
there is not enough space here to detail the entire process. Suffice it to say that KLIC is regarded as the
world leader in the
manufacturing of Wire Bonders which is the stage in the mfg process where the pins are mated to the
silicon
(Layperson description)or more definatively the wire is bonded to
the chip.
3. For those that think that KLIC has found a bottom you are sadly mistaken. We have only begun to
see the carnage in the semi-equipment group. IMHO the real disaster will begin following the balance of
INTEL's announcements and notices to the other 4 companies who are going to loose orders, this will
also be exasberbated by the earnings announcement from Intel and then in May, AMAT.
4. For those that think KLIC is a bargain because it is down from
$58.00 think about this. The reason it flew to $58 was the street perceived there to be the makings of an
up-cycle in the semi-equipment sector. KLIC was receiving orders, shipments were up, the co. was
running around the clock to meet demand and the world was anticipating the switch to 300mm wafers.
Guess what,
Asia brought the parade to an abrupt halt, but you already knew that didn't you? Oh yea, the earnings
estimate for this year was
close to $3.00/share which translated into the stock trading at roughly a 20 P/E based on projected
earnings.
5. Well SEA blew up and order push outs were the norm. Earnings were revised and now $2.00 was
more in line. . .so everyone thought, revised stock price now 12 to 15 P/E equated to $24 to $30.
6. As the price dropped so did the enthusiasm for the coming year
and the stock was range bound, and then out of left field comes Intel, the biggest of big telling KLIC to
S-T-O-P shipping the 8060, the very bonder that was going to save the company during the Asian
Contagion because everybody knew that Intel would never cancel an order, this was their chance to
bring the fabs on line
as SEA was figuring out how to pay for semi equipment.
7. This brings me to the conclusion of this fairy tale. The White Knight(Intel) was derailed by the
sub$1000 P/C, Asia can't pay for product and KLIC has a floor full of bonders(8060's) that were
especially made for Intel, under Intel specs that they probably can't sell to anyone else because it's an
Intel specific piece of equipment. Sure they could probably retrofit them, but even if they did, Who Is
Going To Buy Them? So as our story ends
KLIC will probably hit this Q @ $.32/share, but loose money in Q3, let's say a $.05, and by some luck
break they find somebody to buy something that ships in Q4. What do they earn? A $1.00
maybe, $.80 more likely and at a 20 P/E (I'm being generous folks) that's $16.00. BTW If they loose
money, their $3.00/share in cash will erode and why the street will allow them to trade at a 20 P/E in a
down cycle is beyond my imagination.
So, Who on this thread is still a KLIC Bull? ValleM tossed in the towel based on Scott K's "You're
Shittin' Me" remark, Dennis went flat at $23.50, The KLIC supplier here(hmcc) has been preaching the
downside for 6 weeks, Seminut "Told you So" If anyone can refute my position I welcome opposing
views, but for right now
I bet we see the low to mid teens before the "Buy on the Dip" mentality runs KLIC over $25.
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