Recovery may be looming among the chip makers, but not among the capital equipment makers. Or is this no longer the Semi-Equip/Blood in the Streets thread? I don't see many facts to support the near-to-intermediate term optimism poking its head out on this thread. Some excerpts from recent earnings announcements to back up my viewpoint:
AMAT
"The semiconductor industry downturn continued to deepen during our third fiscal quarter because of poor economic conditions in Asia, industry overcapacity, and weaker than expected PC sales, compounded by a movement to lower priced PCs," said James C. Morgan, chairman and chief executive officer. "The sharp decline in new orders and net sales was broad-based, as customers in all regions reacted to further business difficulties by delaying equipment deliveries and investments in capacity and strategic programs. At this time, we are unable to predict how long this cycle will last, and are therefore assessing the appropriate level of infrastructure necessary to support a lower business volume, while assuring our industry leadership position."
VAR
Chairman and Chief Executive J. Tracy O'Rourke said that while all three of the company's business segments are expected to be profitable for all of fiscal 1998, its Semiconductor Equipment unit continues to battle an industry slump that is longer and deeper than expected. Plagued by overcapacity and the financial crisis in the key Asia market, chip equipment customers are continuing to stretch out deliveries and postpone orders for new systems. As a result, he said the Semiconductor Equipment business is now expected to suffer an operating loss in the fourth quarter.
"While no one knows for sure, current estimates suggest the chip industry slump could last another four to six quarters," said O'Rourke. "Consequently, we are resizing that business to maintain what we think will be a breakeven level as we work through the remainder of the downturn without reducing the key investments that will allow us to take advantage of the eventual rebound."
LRCX
''Clearly, this has been a difficult year for Lam as we have faced the combined challenges of repositioning the company and doing so within what has become the worst downturn the industry has seen in over a decade. We expect our business to continue to be impacted over the next several quarters,'' stated James W. Bagley, chief executive officer of Lam.
SFAM
''We continue to see the impact of the worldwide semiconductor industry slowdown on sales of CMP systems,'' said Makoto Kouzuma, SpeedFam president and chief executive officer. ''We also continue to see softness in the thin film memory disk media and silicon wafer markets. General overcapacity, compounded by global economic forces, has slowed the growth of all of our markets. In response to these conditions--and the fact that they are likely to be with us for some time to come--we are systematically reducing costs and expenses wherever practical to align them with lower revenue expectations.''
Regards,
G.P. |
