More bear food:
BW0152 NOV 19,1998 11:29 PACIFIC 14:29 EASTERN
( BW)(INFORMED-INVESTORS) Semiconductor Equipment Orders Will Not Snap Back As In Past Cycles, Industry Analyst Predicts
Business Editors
SAN DIEGO--(BUSINESS WIRE)--Nov. 19, 1998--The semiconductor capital equipment industry will not bounce back until late 1999 and beyond, an industry analyst predicted recently at a technology stocks forum for individual investors in San Diego.
"Our forecast of bookings and billings going forward shows something unique compared to previous cycles," said Theodore O'Neill, semiconductor capital equipment analyst at Needham & Co. "It does not show a rapid snap-back in terms of bookings as every other previous cycle has shown.
"The downward cycle has been unique in its severity and magnitude. From the bookings' peak in September 1997 to September 1998, it has fallen 68%," O'Neill told the Nov. 8 Informed Investors Technology Stocks Forum. "In terms of bookings, this level hasn't been seen since 1993 when all the companies in this space were a quarter the size they are today.
"It'll take four consecutive quarters of 33% growth in orders just to get us back to where we were in September 1997 in terms of level of business," O'Neill added. "There is literally no way you can fire people fast enough to bring the business down to that size and keep up the pace with the decline."
Companies such as industry stalwart Applied Materials (Nasdaq:AMAT) have reported large declines in revenue and net losses this year. O'Neill said Needham forecasts losses for virtually all the semi equipment companies in 1999, as "front end" makers see a slow ramp-up next year.
Test and assembly side makers will likely recover earlier. Credence Systems (Nasdaq:CMOS), LTX (Nasdaq:LTXX), Teradyne (NYSE:TER), Cohu (Nasdaq:COHU) and Kulicke & Soffa (NASDAQ:KLIC) are among the companies in this space, O'Neill said.
Large cap stocks held up much better than small caps, O'Neill added. Share prices of Applied Materials and Novellus (Nasdaq:NVLS), for example, "have gotten significantly ahead of fundamentals," he said.
Semiconductor equipment stocks above the $350 million market cap have bounced back in recent weeks "to 4, 5, or 6 times book value and there's no fundamental change in business. Business still looks very bad," O'Neill said. "On the small cap side, stocks at the bottom were selling recently for book or less than book. Next year, people will wake up and see these smaller caps as good values."
The Forum also featured a keynote address from Kevin Landis, portfolio manager ofTechnology Value Fund and co-founder of Silicon Valley-based Firsthand Funds. Also, executives presented from seven technology companies: Caere Corp.; TriQuint Semiconductor; Watkins-Johnson; Optical Coating Lab; Genesis Microchip; Interlinq Software; and ATI Networks.
Audio tapes of the Forum are available for $48.95. A transcript of the keynote speakers' remarks is $25. For details, visit Informed Investors' website at www.informedinvestors.com or call 800/992-4683.
Since 1993, Sacramento, Calif.-based Informed Investors has featured scores of quality companies and industry experts at its Forums. Informed Investors is the only independent organization that regularly offers analyst-style, industry-specific conferences geared for individual investors.
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CONTACT: Informed Investors
Sean Finnigan, Steve Chanecka or Tim Quast, 916/448-8222
or 800/992-4683
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: BANKING COMED COMPUTERS/ELECTRONICS
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