Bernard, I am now completly paralyzed by Aroons, at least until I get some experience under my belt.
AMAT is scheduled to meet with analysts on Tuesday at Semicon. The Arrons do not look good, a negative xover:
stockcharts.com[w,a]dacayiay[db][pb50,10!b200!f][vc60][iut!Lv25!Lw25]&pref=G
ALCS edged over its 200 day MA with normal volume. On valuation there doesn't seem much downside. Its trading at book and just above cash per share (no debt). I would let it ride as long above the 200 day.
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Research notes from Goldman Saks on Semicon:
GS US Semi and SPE weekly - Semicon
West likely a negative catalyst for SPE
stocks
We believe the Semicon West trade show, beginning July 11th, will once again be a
negative catalyst for the SPE stocks as it has been for 3 out of the last 4 years. We believe
that customers will provide updated order and shipment outlooks to the equipment
suppliers and, given the significantly front-half loaded 2005 semi capex budgets and the
severe excess supply in the memory segment, we expect those updates to be generally
negative. We do believe that foundries will provide more upbeat forecasts to the SPE
companies but we do not expect the foundries to place significant hard orders in CQ3. We
therefore expect equipment companies that provide order updates at the show (including
KLA and Tokyo Electron, among others) to offer subdued outlooks for CQ3 which we
expect will serve as a negative catalyst for the stocks as many are calling for sequentially
higher sequentially CQ3 orders.
SEMICON WEST LIKELY TO BE A NEGATIVE CATALYST FOR THE SPE GROUP.
SEMICON West, a Semi Equipment industry trade show hosted by Semiconductor
Equipment and Materials International (SEMI), will take place the week of July 11th in
San Francisco, CA. The official show begins on the Tuesday, July 12th, but Novellus
Systems will kick off the event with an analyst meeting hosted in conjunction with the
show in San Francisco on Monday evening. Several other SPE companies will host
analyst meetings in conjunction with the show as well, including Applied Materials,
Tokyo Electron, KLA-Tencor, Credence Systems, Asyst Technologies, Entegris/Mykrolis,
and Kulicke & Soffa Industries, among others. See Table 1 below for our analyst meeting
calendar.
Over the last several years, SEMICON West has tended to be an important catalyst for the
semi equipment group as semi equipment companies use the show as an opportunity to
meet with their customers and as a result get a better understanding of the fundamental
outlook. In 2001, it became apparent at the show that the downturn the industry had begun
to experience would persist for several more quarters. In 2002, it became evident at the
show that fundamentals were rolling over after a brief headfake fundamental upturn in the
spring of 2002. In 2003, it was clear during the show that the next cyclical upturn was
beginning and in 2004, the overall tone of the show fell short of heightened expectations
and it began to become apparent that the next cyclical downturn was beginning.
This year we expect the show to be a negative catalyst for the semi equipment group given
the significantly front-half loaded nature of semi capex budgets and the excess capacity
problem we believe is still plaguing the industry, particularly in the memory segment.
While we expect foundry customers to give the semi equipment companies some reason
for optimism, we don't expect the foundries to place significant new orders or give precise
timing for when significant new orders will be placed. We expect Q3 orders to be down
about 5% to 10% sequentially driven by declining memory orders, which will not likely be
offset by a significant increase in foundry orders.
In regards to specific newsflow at the show, we would expect KLA to give an order
update during its analyst meeting on Wednesday afternoon that has the potential to be
negative given that the outlook for the September quarter looks murky and the company is
The Goldman Sachs Group Inc. does and seeks to do business with companies covered in
its research reports. As a result, investors should be aware that the firm may have a
conflict of interest that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their investment
decision.
Analyst Comment July 4, 2005
typically conservative in its guidance given that September is a seasonally weak quarter for KLA.
Tokyo Electron is also likely to give an order update at its analyst meeting on Tuesday. As our team
in Asia indicated in a note out last week, TEL's CQ2 semi equipment orders are likely to be a bit
light of the company's 100 billion yen projection driven by weakness in Taiwan and Southeast Asia.
Some of this weakness is likely being offset by LCD orders that our team believes came in a bit
above the company's 20 billion yen forecast. We would also expect Novellus to be cautious in its
commentary at the trade show on Monday evening, given that management has been focused on oil
prices (which are approximately 10% higher today than last quarter when management reiterated
that oil prices remained an impediment to the cycle) and NAND flash as a driver of new orders
(where recent demand weakness for MP3 players has become apparent and excess supply is driving
NAND spot prices down precipitously).
Table 1. Analyst meeting agenda for SEMICON West.
Date Time Novellus Systems Monday, July 11th 4:00 0 6:00 PM PDT Applied Materials Tuesday,
July 12th 7:30-9:30 AM PDT Credence Systems Tuesday, July 12th 8:00-10:00 AM PDT Asyst
Technologies Tuesday, July 12th 10:00 AM - 12:00 PM PDT ASML Tuesday, July 12th 12:00 PM
PDT Tokyo Electron Tuesday, July 12th 3:00-4:00 PM PDT Veeco Instruments Wednesday, July
13th 7:00-9:00 AM PDT Axcelis Technologies Wednesday, July 13th 8:00-10:30 AM PDT ASM
International Wednesday, July 13th 8:00-9:30 AM PDT Entegris/Mykrolis Wednesday, July 13th
9:00-10:00 AM PDT Brooks Automation Wednesday, July 13th 11:00 AM PDT Kulicke & Soffa
Industries Wednesday, July 13th 3:00-5:00 PM PDT KLA-Tencor Wednesday, July 13th 3:30 - 5:30
PM PDT SEMI bulls and bears panel Thursday, July 14th 11:30 AM - 1:00 PM PDT Source:
Company information.
WE VIEW APPLIED MATERIALS' ACQUISITION OF SCP'S WAFER CLEAN TECHNOLOGY
LAST WEEK AS A POSITIVE, AS WE BELIEVE THE COMPANY NEEDS TO START
TAKING MORE RISKS IN ORDER TO STIMULATE GROWTH. Last week Applied Materials
announced that it purchased SCP Global Technology's single-wafer HF-last immersion technology
and Marangoni clean/dry intellectual property for an undisclosed sum. We believe the technology
purchased from SCP is intended to compliment and rejuvenate Applied's Oasis wet clean tool,
which was introduced in 2002 but has not gained significant customer traction. Recall that the Oasis
wet clean tool is a single-wafer multi-chamber 300mm wet cleaning tool. The Oasis tool was
designed to be capable of cleaning during both transistor formation (front-end-of-line (FEOL)) and
interconnect formation (back-end-of-line (BEOL)). That said, Applied initially targeted the FEOL
stage of the manufacturing process but we believe that the company found limited success in FEOL
applications and only slightly better success in BEOL of applications.
We understand that the SCP technology that Applied purchased is targeted toward a difficult step in
the wet clean process used by both logic and DRAM customers. The SCP technology is intended to
have the control of a single wafer tool with the performance/economics of a wet bench tool. We
believe that Applied intends to utilize the strong technology offering of SCP in wet clean to
compliment its Oasis tool and help it penetrate new customers. We therefore view the acquisition of
SCP's technology as a positive for Applied, as we believe that the semi equipment industry needs
more companies growing through innovative technology/product offerings as opposed to offering
tool discounts and increased lower profitability services offerings. Given that the underlying market
hasn't grown in ten years, and we don't expect it to grow much over the next ten, companies need to
start thinking outside of the box on how to integrate technologies and drive company specific
growth. We think Applied's acquisition last week is at least a first step in that direction. |
