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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: StanX Long who wrote (45816)	4/23/2001 10:41:54 PM
From: Just_Observing	Read Replies (1) \| Respond to of 70976

Here is some food for thought on the latest B2B: There are 2 points to be made about the B2B 1. It was lower than expected. Analysts were expecting 0.67 (at least Joe Osha, the Merrill analyst was expecting 0.67). 2. The B2B is a ratio, and by itself, it cannot reveal the true picture. However, a number such as shipments and the B2B ratio can mathematically define the picture. The shipments of semiconductor equipment fell 12% during the last month (down to $2038.4 MM from $2294.3 MM) as compared to just a 1% fall the previous month (from $2308.4 MM to $2294.3 MM). If we had extrapolated from the previous 4 months, shipments should have fallen a paltry 2.8%. Now if shipments had fallen just 2.8%, then the B2B would have been 0.585. Thus, the sharp falloff in shipments is making the B2B appear much better than it is. Thus, we are very close to historical lows (at least the last six years) on the B2B. semi.org!OpenDocument

To: StanX Long who wrote (45816)	4/23/2001 10:57:51 PM
From: Katherine Derbyshire	Read Replies (2) \| Respond to of 70976

I don't think a straight comparison to 97/98 is valid. For example, in 1997 it took four months for the BtB to fall from 1.0 to .82. A similar magnitude drop took only one month this year. Simply extrapolating the number of down months while ignoring the derivative (the rate of change for non-math geeks) is, IMO, unlikely to work. Bill McClean (using revenue growth numbers, not BtB) has suggested that the area under (integral of) the up-cycle part of the curve is roughly equal to the area under the down-cycle part of the curve. In fundamental terms, he argues that the excesses of the up-cycle have to bleed off in order to return growth to the long term trend line. If you believe his analysis, which I do, then you would expect steeper downturns to also be shorter. There's also a trace of good news in the billings number. Until recently, it hasn't fallen nearly as far or as fast as the bookings number, suggesting that existing orders are shipping more or less on schedule. Massive order cancellations would improve the ratio (by bringing billings closer to bookings), but would also indicate much more serious pessimism among the chip makers. Katherine