To: Fortinwit who wrote (26169 ) 11/13/1998 9:53:00 AM From: Fortinwit Read Replies (2) | Respond to
I'm going to listen to Scott K tell us about the future KULICKE & SOFFA INDUSTRIES (KLIC) 17 1/4. There is an important difference between first order changes and absolute levels. Semiconductor firms might be seeing more demand, but that does not mean that demand is at high enough levels to create increasing demand for equipment. In other words, just because Intel and other semiconductor makers are seeing rising demand does not mean that business is strong enough that orders for semiconductor equipment will go up. Before the open Friday, semiconductor equipment maker Kulicke & Soffa (KLIC) reported a fiscal fourth quarter (Oct) loss of $0.79 per share. That included one-time charges for layoffs and inventory writedowns, but the company did not even bother to determine the operating profit figure in their press release. It looks like that means KLIC lost less than the consensus estimate that called for a loss of $0.52 per share, but it can not be calculated precisely. Still, it doesn't really matter how KLIC compared to estimates - business stinks. Revenue for the quarter was down 50% from the prior year quarter. The order backlog was only $54 million at the end of this quarter, compared to $118 million last year and $67 million at the end of the third quarter. There is no sign of a rebound in the business yet. The stock trended practically straight down from a 52-week high of 32 3/8 late last year to 9 3/8 six weeks ago. Since then, though, it has nearly doubled as the demand for semiconductors has apparently increased. The fact is, though, that the rebound in demand for semiconductors apparent recently may simply not be strong enough to lead an increasing rate of orders for KLIC. After all, Intel is laying off people even while their orders rebound, so it is not a stretch to believe that the industry remains cautious enough to keep a lid on equipment orders. So, while market optimism reigns about the future for KLIC and almost all semiconductor firms, the fundamentals are still poor. KLIC lost a lot of money anyway you look at it. This industry is very volatile, and business could pick up sharply. But the stock has already moved up in expectation of something of which there is yet no sign. If a rebound in orders is decent, but not great, KLIC may still be unprofitable. Chasing the stock at this point is speculative. The chance to bottom fish may already be gone.
