)
Besides criticizing SEMI for jerking around their release date and an "error" or
two which could haven been construed as "convenient" for insiders holding options, there hasn't much to report on SEMI in
quite some time.
So far in 2006 the numbers are ($M):
2006 Bill Book B:B
Jan 1,259 1,226 0.97
Feb
1,283 1,293 1.01
Mar 1,339 1,385 1.03
Apr 1,441 1,604 1.11
May
1,453 1,619 1.11
Jun 1,557 1,782 1.14
Jul 1,648 1,749 1.06
-------------------------
YTD
9,980 10,658 1.068
Projected over 12 months:
17,108 18,271
The 2006 run-rate vs. CY05 is +20.2% billings and +47.4% bookings y-o-y. However,
CY05 was a weak year. All 12 months in CY05 reported a sub-1.00, or negative, B:B. When February, 2006 reported a 1.01 B:B,
it broke a string of 17 consecutive "negative" numbers.
July, 2006 marked the sixth consecutive month with a "positive" B:B.
The 2006 run-rate vs. CY04 is +4.8% billings and +7.0% bookings. Since CY04 (y-o-2y)
was by far the best SEMI year since 2000, this is news! The correct term would be "was" news, since CY06 has been ahead of
CY04 for several months.
In case you were wondering:
The 2006 run-rate vs. CY00 is -34.2% billings and -43.4% bookings! SEMI is still
a looong waaaay from boom year run rates.
The point remains SEMI B:B has already run positive for six consecutive months. Why
are VLSI Research and J.P. Morgan, and presumably the rest of the cheerleaders, deciding to tout SEMI stocks this week?
Particularly when SEMI & VLSI both admit July bookings were below June? And the B:B actually fell from 1.144 to 1.061
in July?
An impartial observer might read "sell" here rather than "buy."
Of Morgan's three stock recommendations accompanying their "Buy Semi Equipment Stocks
Now!" headline, one is up 20%+, one is flat and one is down ~8% since February, 2006. If six straight months of strong B:B
didn't get these stocks up to fair value, what will it take? (Also note one of Morgan's downgrades was Credence Systems, which
was ALREADY down -75% since February.)
It seems to us the real "news" here is the cheerleaders are implicitly admitting
there is nothing to be gained from investing in semiconductor companies at this point. However, Wall Street brokers still
need something to sell John Q. Public and SEMI stocks are therefore anointed as the next font of commissions.
Conclusion:
No thanks, we'll pass on SEMI stocks at this late point in the cycle.
What if we're wrong and there really is another wave of higher SEMI bookings and
billings forthcoming? We know wafer area shipped is already accelerating faster than semiconductor sales(http://www.viewfromsiliconvalley.com/id248.html
