Semi equipment news(dated) (Looks like Needham & Co. analyst changed his mind again on semi equipment makers since this report)
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 - news) 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 - news), LTX (Nasdaq:LTXX - news),
Teradyne (NYSE:TER - news), Cohu (Nasdaq:COHU - news) and Kulicke & Soffa (NASDAQ:KLIC - news) 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 -
news), 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.''
Iris
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