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

To: advocatedevil who wrote (51060)	8/23/2001 12:48:34 AM
From: trilobyte	Read Replies (1) \| Respond to of 70976

WIT Soundview's views on the btb SEMI July Book-to-Bill Report: Straddling Along the Bottom! Last night SEMI reported July's three-month average billings and bookings for U.S.-based semiconductor equipment manufacturers. The overall book-to-bill ratio in July increased to 0.67 from the reported 0.56 in June, as bookings increased by 5% while billings declined by 12%. Front-end bookings increased by 2.7% from June. We attribute this upside to Applied Material's pull-in of Intel's order late in the just-reported quarter (something that we discussed following Applied Materials' quarterly conference call) and to a slowdown in order cancellations. We view June's reported $72 million in back-end orders as a figure well below maintenance levels. Therefore, a return to normal maintenance levels, combined with a slowing of order cancellations, helped, in our opinion, push back-end bookings in July up by 26% over June. Similar to the sequential order growth for semiconductor testing equipment at Agilent, we do not attribute the double-digit sequential order growth to the overall health of the back-end industry. We remind investors that almost all subcontract TAP companies have reduced their capital expenditures for the second half of 2001. Additionally, with utilization rates at back-end operation of IDMs running at 50%-55%, we do not expect them to start placing significant capacity-buys anytime soon. We believe that July's back-end order growth is a direct reflection of technology buys for mixed-signal testers, particularly for SoCs, off below-maintenance-level orders reported in previous months. As new products are manufactured using 0.18-micron and below process technologies, we expect subcontract TAP and IDMs to selectively purchase high-end testers, as existing ones are not suitable for SoC test. Going forward, we expect overall capital equipment bookings to straddle along the bottom, while billings continue to decline. We, therefore, would not be surprise if the overall ratio improved slightly from its current value. In terms of capital equipment stocks, we caution investors of volatility in the near term due to the lack of improving fundamentals in the near future. For those investors interested in playing technology buys for SoC testers, we recommend TER at current levels due to its market leadership in SoC/mixed-signal test and its attractive risk/reward opportunities.