Revenues in-line with orders well below lowered expectations. New orders down 59% – silicon off 79% q/q, display –60% q/q, even mighty solar down 34% q/q. The company declined to guide for next quarter but then completed the sentence by saying revenues would probably be down 30% q/q, which would probably put revenues at about 1 billion for Q1, ~5% below the street’s expectations. The company indicated they see no near-term return to order growth. When asked about the recent memory price hikes and whether they were seeing any improvement as a result, they indicated the memory price strength was due to supply cuts and not incremental demand.
The Skew: With semiconductor utilization averaging in the mid 40s for most major producers, its very hard to imagine a scenario where capacity additions come on in a significant way. Think of it this way: if business doubled from current levels for semiconductor manufacturers, they would move to 90% utilization and be able to produce enough to meet demand with existing capacity. Process changes, such as Intel’s conversion to 32 nanometer technology, will provide some opportunity for semiconductor equipment companies, but a return to the heady days of yesteryear are unlikely.