Gaping Holes in the SOX Recovery Story Part 2
Kurlak: "The Semiconductor Industry Association has now reported three straight months of 20% year-over-year sales growth without any help yet from chip pricing."
Chip source: "These statistics were viewed by most analysts as universally disappointing. This was a distinct slowdown from previous months' growth rates, and marked a top in the current cycle. The only reason it was up 20% year over year was because of easy compares against last year's disastrous inventory bubble. Sequentially, the industry is showing no growth in what should have been a seasonally strong period."
Kurlak: "Wall Street received some confirmation of better demand when, in early December, several leading semiconductor companies, including Intel (INTC:Nasdaq - news - commentary - research - analysis), Texas Instruments (TXN:NYSE - news - commentary - research - analysis) and Xilinx (XLNX:Nasdaq - news - commentary - research - analysis), raised their forecasts for December-quarter sales -- the first such upward revisions in more than a year. National Semiconductor (NSM:NYSE - news - commentary - research - analysis) also reported stronger-than-expected fiscal second-quarter sales. In addition, gross margins are starting to improve (a good leading indicator), which also reflects pricing stabilization as well as cost reductions."
Chip source: "He fails to mention Silicon Storage (SSTI:Nasdaq - news - commentary - research - analysis), Integrated Device Technology (IDTI:Nasdaq - news - commentary - research - analysis), Cypress Semiconductor (CY:NYSE - news - commentary - research - analysis) and Cirrus (CRUS:Nasdaq - news - commentary - research - analysis) preannouncements of weaker-than-expected results.
"Xilinx raised guidance by a whopping 1%. National Semiconductor beat this quarter, but then gave weaker-than-expected guidance for the upcoming quarter and the stock sold off. Intel also sold off after their mid-Q update."
Kurlak: "It's looking increasingly likely that first-quarter sales will increase sequentially from the fourth quarter rather than decline slightly, as would be seasonally normal."
Chip source: "Giant contract manufacturers that produce everything electronic like Jabil (JBL:NYSE - news - commentary - research - analysis), Solectron (SLR:NYSE - news - commentary - research - analysis) and Flextronix (FLEX:Nasdaq - news - commentary - research - analysis) guiding Q1 down 5% to 10% on an organic basis? Where is this growth going to come from if end-markets are all down
AI
