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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Tenchusatsu who wrote (143396)	3/21/2002 12:33:38 AM
From: tejek	Respond to of 1583662

Sorry this is screwed, will repost. B2B is moving up so slowly.......anyone who's been through one of these cyclical turns before......is this unusually slow for a B2B recovery? ________________________________________________________________________________________________________________________ Slow Draw for Chip Gunslingers Despite Bullish Book-to-Bill By Rebecca Byrne Staff Reporter 03/20/2002 01:43 PM EST A rise in February's chip-equipment book-to-bill reported on Wednesday seemed to support the bullish view that the industry is on the upswing. So why aren't stocks rallying? It could have something to do with cautious analyst comments on Intel on Wednesday, or concern that the pace of an actual recovery in the sector will be slower than most investors currently expect. The preliminary chip-equipment book-to-bill came in at 0.87, increasing from the 0.81 reading in January, due to a faster rise in orders vs. shipments. A ratio of 0.87 means that $87 worth of new orders was received for every $100 of product billed for the month. Overall orders reached $712 million, up 10% from last month, while total shipments hit $822 million, up 3% from January. Merrill Lynch analyst Brett Hodess said the report "quantitatively confirms all the qualitative data points we have been gathering of late, and confirms that the industry is in the early stages of a recovery." Creeping Back Besides evidence that bookings are picking up, Hodess said, fabrication plant utilization rates are also improving. For the month of February, utilization rose slightly to 62.6%, vs. a revised January utilization rate of 62.3%, according to the Federal Reserve. "Utilization remains a leading indicator for equipment orders and, therefore, stock prices," he noted. Still, at 62.6%, there remains a lot of excess manufacturing capacity. It's also worth noting that while chip-equipment orders have increased somewhat, they are still 56% below last year's level and 76% below the peak levels seen in October 2000. "We're seeing some strategic purchases of new technology by companies who are preparing for new engineering standards," said Edward White, an analyst at Lehman Brothers. "It's helping the industry out of the trough but not enough to lead to a recovery right away." White said chip-equipment stocks will only truly recover when demand for products such as PCs, cell phones and wireline telecommunications equipment picks up. So far there has been little evidence of this. Anemia On Tuesday, computer reseller CDW Computer Centers lowered its first-quarter targets, citing tough business conditions. "It's a very slow recovery," White noted. "We're not seeing growth in demand in the end markets." Bear Stearns analyst Charles Boucher said he expects PC component fundamentals to be seasonally weak during the June quarter, and said this could cause downward pressure on the group during the next three to four months. "Growth is likely to be back-end-loaded, as end-market demand will probably lag an economic recovery," he said. "The biggest near-term risk to chip stocks is slower-than-expected improvement in third-quarter growth." Chip and chip-equipment stocks have climbed sharply over the past few months amid signs that fundamentals are starting to improve, and on the belief that a solid recovery would likely materialize in the second half of the year. The semiconductor index has climbed 12% since the start of the year, with most stocks trading at rich multiples. Applied Materials for example, trades at 105 times forward earnings, while KLA Tencor trades at 78 times forward earnings. Among chip stocks, Intel has a forward multiple of 46, and Advanced Micro Devices trades at 164 times forward earnings. "Without meaningful signs that end markets are turning, we find it difficult to model the strong second-half recovery that appears to be discounted in current stock valuations," White said.