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Technology Stocks : Helix Technology, a cold play on semiconductor equipment -- Ignore unavailable to you. Want to Upgrade?

To: mopgcw who wrote (1161)	6/21/2004 8:31:22 PM
From: mopgcw	Read Replies (1) \| Respond to of 1227

GS US SEMI EQUIP BOOK-TO-BILL: ORDER MOMENTUM MODERATING Summary: SEMI released the May US book-to-bill (b-t-b) ratio of 1.11 (GS 1.14 & the Street 1.13) with orders and shipments both coming in below our and the Street's expectations. Orders were flat m-m (6% below our estimate) and shipments were up 2% m-m (3% below our estimate). May marks the first time in ten months during which front-end orders have not increased m-m and the second month in ten months when back-end orders have declined m-m, consistent with our view that industry-wide order momentum is moderating. We are estimating a flat b-t-b ratio in June on order growth of 1% m-m and shipment growth of 1% m-m. We continue to emphasize that the b-t-b should not be a trading event for the stocks as it is backward looking and unaudited. No change to our belief that it is too late in the fundamental cycle to be overweight the semi equipment stocks. 3-MONTH ROLLING AVERAGE BOOK-TO-BILL OF 1.11 WAS BELOW OUR 1.14 ESTIMATE. Semiconductor Equipment and Materials International (SEMI), a semiconductor equipment industry trade association, reported its three-month rolling average May bookings and shipments statistics on Thursday night. The U.S.- based semi equipment suppliers' book-to-bill ratio was 1.11, 0.03 below the GS 1.14 estimate and 0.02 below the Street 1.13 estimate. Orders were $1,577 million, 6% below our estimate of $1,680 million (flat month-over- month and +118% year-over-year). Shipments were $1,422 million, 3% below our estimate of $1,470 million (+2% month-over-month and +77% year-over- year). The front-end book-to-bill was 1.09 on flat orders month-over-month and +129% year-over-year and shipments +3% month-over-month and +74% year- over-year. The back-end book-to-bill ratio was 1.18 on orders -1% month- over-month and +88% year-over-year and flat shipments month-over-month and + 85% year-over-year. April's overall book-to-bill was revised downward to 1.13 from 1.14 on slightly lower (less than 1%) orders and shipments. SLOWDOWN IN ORDER GROWTH CONSISTENT WITH OUR BELIEF THAT ORDER MOMENTUM IS MODERATING ACROSS THE INDUSTRY. May marks the first month in 10 months when front-end orders have not increased month-over-month and only the second month in 10 months when back-end orders have declined month-over-month. The data for the month of May are therefore consistent with our belief that order momentum is slowing across the industry as the cycle is now well past the mid-point of the upturn. JUNE BOOK-TO-BILL EXPECTED TO REMAIN FLAT AT 1.11 ON 1% M-M ORDER GROWTH AND 1% M-M SHIPMENT GROWTH. We are estimating a flat book-to-bill ratio in June, on 1% m-m growth in orders and 1% m-m growth in shipments. We are modeling three-month rolling average overall orders of $1,585 million (+1% month-over-month) and overall shipments of $1,430 million (+1% month-overmonth). We estimate front-end shipments of $1,120 million (flat month-over- month) and front-end orders of $1,220 million (flat month-over-month), yielding an estimated front-end book-to-bill ratio of 1.09. We estimate back-end shipments of $310 million (+1% month-over-month) and back-end orders of $365 million (+1% month-over-month), yielding a back-end book-to- bill ratio of 1.18. WE CONTINUE TO BELIEVE THAT IT IS TOO LATE IN THE FUNDAMENTAL CYCLE TO BE OVERWEIGHT THE STOCKS. We continue to highlight that the book-to-bill should not be a significant trading event for the stocks given that it is a backward looking and unaudited metric. As we have noted on numerous occasions, given that the semi equipment industry passed its normalized levels of cash flow when Applied reported EBITDA margins that were greater than 18% in February, we believe that it is too late in the fundamental cycle for investors to be overweight the semi equipment stocks. I, Jim Covello, hereby certify that all of the vi