Semiconductor Capital Equipment Stocks Discussion: maturing of the cycle

» Kirk - maturing of the cycle

Robert Maire from Bear Stearns:

The semiconductor equipment book to bill came in at 1.42, better than our expectations, and street expectations. This was down from a revised 1.46 in March reflecting a slightly healthier shipment level.

The front end book to bill ratio followed the overall trend and was 1.38.

The back end was up very modestly at 1.51 from 1.50.

We think the street reaction to the book to bill number should be positive as we were expecting more of a decline in the numbers.

Orders continued to grow, up a healthy 10% sequentially to $2.7B. Shipments improved and were up 11% to $1.9B. The fact that shipment rates have improved gives us some comfort that the industry is ramping shipments successfully. The fact that the book to bill ratio did not drop off as sharply it could have suggests that we are just seeing a maturing of the cycle and that shipments are catching up to orders as compared to weakness in the order flow.

Stocks have been under pressure over the last week and this should help ease some fears of a rapid deceleration.

-- posted by Kirk