Henry, I'm a poor source of information on ESI. Currently, I'm living in Australia and feel very disconnected. Looking at the news that everyone reads, I see the book to bill ratio has been steadily improving and that we see again an increase greater than 1 this month.
Month Shipments Bookings Book-to-Bill
November 913.6 767.2 0.84
December 920.9 883.4 0.96
January 890.0 996.7 1.12
February 845.0 1,028.8 1.22
March 922.8 1,227.8 1.33
April 1,018.9 1,305.2 1.28
Of all the companies in my portfolio, I don't really look at ESI as often for day trading. I think the market for their products is very strong and we'll see our investment payout overtime.
Regards, Mark
From Electronic News--May 24, 1999
Chip Recovery: It's For Real
Equipment orders confirm rebound
By Jeff Dorsch
Austin--Growing orders for semiconductor capital equipment seem to confirm a long-rumored turnaround in the overall semiconductor market.
Reports last week by Applied Materials Inc. and Semiconductor Equipment & Materials International (SEMI) indicated that capital equipment orders are accelerating, although business generally remains at levels lower than a year ago.
Applied Materials reported booking a record $1.39 billion in orders for its second fiscal quarter ending May 2, with Taiwan accounting for 25 percent of those orders, second only to North America's 30 percent.
The April book-to-bill ratio for North American equipment vendors came in at 1.28, down slightly from March's revised figure of 1.33, as shipments were up 10 percent from the previous month and bookings rose 6 percent compared with March.
Taiwanese chipmakers--espec-ially the silicon foundries--are helping lead the charge. Taiwan Semiconductor Manufacturing Co. (TSMC), the worlds biggest foundry, is increasing its capital spending budget for 1999 by 36 percent, to $1.13 billion from $830 million, in light of demand from North American customers. Earlier this year, Motorola Inc. agreed to shift some of its semiconductor manufacturing to TSMC.
TSMC had even more hope last week for equipment vendors, who have spent years and millions of dollars adapting their products for 300mm wafer processing, only to see the semiconductor industry lose interest in the 300mm transition and worldwide plans for 300mm fabs dwindle to a handful of relatively modest pilot lines.
F.C. Tseng, president of TSMC, said in San Jose last week that his company and an affiliate, Vanguard International Semiconductor Corp., may begin construction as early as next year on a $2.1 billion 300mm fab in Taiwan. The facility may begin volume production in 2002, and would be capable of fabricating 0.13-micron device features.
Credence Systems Corp. of Fremont, Calif., a supplier of automatic test equipment, last week reported second-quarter sales for the period ending April 30 were $38.1 million, up 44 percent from the first quarter's top-line figure of $26.5 million. Compared with the second quarter of fiscal 1998, however, sales were down 49 percent, from last year's $74.7 million.
There wasn't good news everywhere in semiconductor equipment and materials. Etec Systems Inc. of Hayward, Calif., last week reported that sales in its third fiscal quarter ended April 30 declined by 18 percent compared with a year ago, to $57.2 million from $70 million.
"Revenues were impacted by lower unit demand for mask pattern generation systems, which has been affected by limited capital investments for mask-making equipment in Japan and overcapacity in Taiwan, as well as continued consolidation among maskmakers," Etec stated. "Additionally, mask pricing pressures in Europe have impacted demand in that region."
Etec laid off about 100 employees during the quarter and consolidated its European facilities to cut costs. It said it expected to show a net loss in its fourth quarter, as it did in the third quarter, and it may have a loss in the first quarter of fiscal 2000. Investors responded to the news last Thursday by sending the company's stock down 15.6 percent, off 5-5/8 to 30-3/8.
Photronics Inc. of Jupiter, Fla., an independent photomask manufacturer and one of Etec's biggest customers, reported that sales in its second quarter ended May 2 were down 12 percent compared with the like period of a year ago, to $53.8 million from $61.3 million. Sales were up 12 percent on a sequential basis, however.
The big news of the week was the quarterly report from Applied Materials. The Santa Clara, Calif., company is the world's largest supplier of capital equipment, and it serves as a bellwether of the equipment business.
Applied reported second-quarter net sales were $1.12 billion, down 5 percent from the year-ago period's $1.18 billion but up an eye-popping 51 percent from the first quarter's $742 million. Orders leaped 35 percent from the first quarter, to $1.39 billion from $1.03 billion, and backlog at the end of the second quarter was up 18 percent from the end of the first quarter, to $1.36 billion to $1.15 billion.
Even more impressively, Applied made a healthy profit in the face of accelerating business, which can be hard for some equipment vendors, as they scramble to handle increased levels of activity. Net income in the second quarter was $141.6 million or $0.36 per diluted share, approximately the same as the $141.2 million or $0.37 a share in net income for the second quarter of fiscal 1998. The period's net leaped up from $42.5 million or $0.11 per diluted share in the company's first quarter.
While North America and Taiwan represented over half of Applied's orders in the period, Japan accounted for 17 percent, Europe 14 percent, South Korea 8 percent and Southeast Asia/China 6 percent. Earlier in this decade, South Korea was usually second to North America in the geographical breakout of Applied's orders, but the Asian financial crisis of 1997 has had a chastening effect on the leading Korean chipmakers.
"During the quarter, we were able to capitalize on our extensive product strength and global support to capture bothmanufacturing capacity and technology advancement purchases," said James C. Morgan, chairman and chief executive officer of Applied, said in a prepared statement. "In addition, we are now beginning to realize improved productivity and operating performance as a result of the restructuring actions taken in the last half of fiscal 1998."
He added, "The semiconductor industry continues to show signs of improvement in a healthier global economic environment."
"Despite the steady weakness in DRAM prices, the market for devices used in the communications and networking industries is driving silicon consumption," said Carl Johnson of Infrastructure, a market research firm in Irving, Texas. "If you have been following the news wires for the last few weeks, you know the Internet appliance world is heating up. Companies in the foundry business are taking advantage of this boom by adding leading-edge manufacturing capacity.
"Applied expects foundry equipment purchases to become a much larger percentage of their total business in the future. The development of very powerful game platforms – the Sony PlayStation for one – is also driving new equipment purchases. These devices require the latest wafer processing technology."
Separately, SEMI's April book-to-bill figure slipped slightly from March, as shipments gained more steam. A figure of 1.28 indicates that $128 worth of orders was received for each $100 worth of shipments. A figure of 1.0 or higher usually indicates that business conditions are improving or healthy.
Three-month average shipments in April 1999 were $1.02 billion. The figure is 10 percent above the March 1999 level, and 28 percent below the April 1998 level of $1.4 billion. Three-month average bookings increased in April 1999 to $1.3 billion. The bookings figure is 6 percent above March 1999 and 18 percent above the April 1998 level of $1.1 billion.
"The continued strength of equipment orders is very encouraging," said Stanley Myers, president of SEMI. "Now that the Asian business climate has stabilized, reports of price weakness in the DRAM market seem to be accelerating the push to next-generation 0.18-micron technology for memory products. Test, assembly and packaging businesses are also recovering more quickly than expected thanks to the move to faster and more integrated chip designs."
In a separate report, SEMI also announced the first quarter 1999 results for total bookings and shipments of the global semiconductor equipment industry. Shipments by all manufacturers in the first quarter of 1999 increased to $4.2 billion, 7 percent over the $3.95 billion shipped in the fourth quarter of 1998. First quarter 1999 orders were up to $5.2 billion, a full 38 percent above the fourth quarter 1998 bookings figure of $3.8 billion.
SEMI compiles the global bookings and shipments figures in cooperation with the Semiconductor Equipment Association of Japan.
Goldman Sachs & Co., the New York investment banking firm, said, "Our April book-to-bill estimate posted last month was 1.15. Aggregate shipments were in line with our estimate, while orders were 11 percent above our estimates. We were 3 percent low in our front-end shipment estimation and our order estimate was 14 percent low (actual up 6 percent versus our estimate of up 2 percent sequentially). Test and assembly shipments were 12 percent below our model, but orders were 3 percent ahead of our estimate.
"Our May book-to-bill estimate is 1.10, as shipments are likely to start to catch up to orders. April bookings were 28 percent ahead of shipments, indicating that backlogs are building as the a U-shaped shipment recovery continues." |
