SEMICONDUCTOR BOOK TO BILL RATIO AT 1.21 PCT
The Semiconductor Industry
Association put the three-month average book-to-bill ratio at
1.21, which was above analysts' expectations and reflects the
sixth straight increase in this indicator of computer industry
activity.
    Average booking in the three month period ended in March
totaled 910.8 mln dlrs, up 15.6 pct from a month ago and the
highest bookings since September, 1984. March billings, or
computer chip sales in the month, totaled 912.1 mln dlrs, up
34.6 pct from a month ago, the association said. The three
month average billings totaled 751.3 mln dlrs, up 6.5 pct.
    March billings were the strongest recorded since November,
1984, the association said. The book to bill ratio, at 1.21,
was the highest since May, 1984, it noted.
    Preliminary total solid state shipments for the first
quarter of 1987 totaled 2.25 billion dlrs, up 4.9 pct from last
quarter and up 15.9 pct from last year's first quarter.
    Semiconductor Industry Association President Andrew
Procassini said the rise in the book to bill was due to a
substantial increase in U.S. bookings during March.
    "We believe that the bookings increase reflects growing
confidence by electronic equipment manufacturers that some
end-equipment market segments have improved substantially
during the first quarter," Procassini said in a statement.
    The association also revised its book-to-bill ratio
estimate for the three months ended in February to 1.12, from
1.13 earlier. It further revised the January book-to-bill
figure to 1.09 from 1.12 estimated earlier.
    The three-month average book-to-bill ratio of 1.21 for
March means for every 100 dlrs worth of product shipped,
computer chip maker received 121 dlrs in new orders.
    Drexel Burnham Lambert Inc analyst Michael Gumport said
association numbers indicate March orders were up 20 pct above
the normal seasonal level.
    The association does not break out March orders from its
three-month average, which it put at 910.8 mln dlrs.
    Gumport noted the three-month average bookings were well
above the 800-865 mln dlrs anticipated by the industry.
    He said semiconductor stock could rise five to ten pct on
the stock market open tomorrow, due to the positive numbers.
    "Skeptics are going to have to have some pretty strong
reasons not to like this group (of stocks)," Gumport said.
    Kidder Peabody and Co analyst Michael Kubiak said the ratio
indicates March orders at about one billion dlrs, which would
be the highest monthly order rate since April, 1984.
    He predicted at least a five pct rise in semiconductor
stocks on the open, and said the stock group could soar as high
as 15 pct during the session.
    "One month does not a boom-time make, but this is very good
news," he said.
    Kubiak attributed the stong semiconductor orders to
strength in the personal computer market, inventory restocking
and strong buying by distributors.
    Purchasing managers had been keeping computer chip
inventories low, due to the overcapacity in the industry and
the slow growth of the economy in general, analysts noted.
    The semiconductor industry has been in a slump for the past
three years.
    The analysts said the March order and sales numbers are the
strongest evidence yet that the trend may be turning.
    Nevertheless, they do not expect the Administration to
retreat from proposed sanctions against Japanese chip makers.
    They added, however, if the industry continues to improve,
it could mean the sanctions will be short term.
    Jack Beedle, President of In-Stat, an electronics industry
research firm, called the March numbers "excellent", but also
cautioned against excessive optimism.
    "I still believe caution should be the word, rather than
euphoria," said Beedle, adding that he has yet to see strong
indications from the general economy or the computer industry
that support a solid, long-term recovery.
    Beedle said while he thinks the semiconductor industry will
have a very good second quarter, he still thinks positive
shifts in exports and industrial production are needed to
sustain a recovery.
 Reuter
