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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Woody_Nickels who wrote (33878)	1/21/2007 11:24:43 PM
From: etchmeister	Respond to of 96113

2006 was a very good year - capex was up. Nobody will argue that 2006 was not an "up year". Nevertheless even in 2006 at one point bookings started to trend down - as of today for almost six months. Regardless of this nobody would call 2006 a weak year nor a downturn. Assuming 2007 is flat: What does it mean? Overall flat would be very good considering it follows a strong year. What else does it mean? It probably means (just like 2006) we have a period where bookings trend up and where bookings trend down unless there it's a perfect flat line which is unlikely. Newberry said there is possibilty that the first half of 2007 might be stronger than second half (assuming overall 2007 is flat compared to 2007). Based on his comments the sellside concluded/made a case that he was predicting a downturn. Gary Hsueh - CIBC World Markets Okay. And then on the back half of the year, I mean, you're talking about logic and maybe foundry kind of picking back up in terms of the shipments. So you seem to be hedging in terms of your shipment forecast in the back half of the year but you're giving guidance for sequential drops in shipment rates in Q3 and Q4 calendar Q3 and Q4 of roughly 10% and 15%. So, you're most certainly calling for a downturn here in the back half of the year but qualitatively you look -- you sound like you're hedging. So, I'm just trying to reconcile the quantitative information you provided and some of the qualitative information that you're talking about. It doesn't seem to kind of sink up. Steve Newberry Well, it does sink up. Gary Hsueh - CIBC World Markets Okay. Steve Newberry If you're going to have a shipment environment in the first half that I just described and you're going to have a shipment environment for the year that's up 5% to 10%, then you're right. As it lays out today, the second half of the year, we'll have lower shipments, and the second half of the year would have lower revenue. Now, I mean I think most of you have been around this industry long enough to know that what we're talking about here is how this year might shape out if it's a 5% increase in spending and wafer fab equipment and the reality is, of course if we have strong first half shipments, the second half has to be lower because if you look at the shape of '06, the first half of '06 was much lower than the second half of '06. So, if we're going to be, if a company was going to be flat year-over-year, they wouldn't be flat quarter after quarter after quarter. So, it's one of the reasons that sometimes people don't talk about any of this stuff because if -- what comes out of this conversation is a belief that since I've talked to you about what I think the year may play out, that's suddenly now the gospel and that's exactly what's going to happen. Well, that's just flat out not true. We don't know what's going to happen in the second half and what we do know is that if CapEx spending plays out like I've scenarioed it to be, then this is how it's going to look and we'll be at 410 to 430 from an EPS guidance standpoint. So, I'm trying to give people a feel around that scenario and hopefully it's helpful, but if it's confusing I apologize, but I'm not sure what to do.