FOCUS U.S. chip equipment makers seen offering buying opportunities by summer

SAN FRANCISCO (AFX) - Buying opportunities may emerge in the U.S. chip equipment makers by the summer, although the stocks will likely remain volatile in the near term until clearer visbility emerges on industry fundamentals, analysts said.	    Analysts agreed the book-to-bill ratio is likely to continue its decline through the summer and the March number will come in lower than February, but said the rate of the industry's decline may begin to slow.	    The North America February book-to-bill ratio fell to 0.77 from a revised 0.80 in January, as orders for semiconductor production devices fell to 1.80 bln usd from the previous month's 1.87 bln, Semiconductor Equipment and Materials International (SEMI) said.	    "We are not yet at the fundamental equipment bottom," Thomas Weisel analyst Eric Ross said, noting that during the last industry downturn stocks in the sector "did not bottom until very near to the fundamental bottom."	    "We believe that the stocks have already factored in a 30-40 pct decline from peak quarterly revenue revenues for equipment and weak PC sales in the first calendar quarter of 2001."	    Stocks in the sector will likely remain volatile and bound to a trading range until the industry reaches its fundamental bottom, analysts said, adding that some buying opportunities may however emerge as the market begins to anticipate the upturn in the sector.	    "We believe the equipment stocks are likely to remain volatile over the next six months until we have better visibility into end-market demand," Prudential Securities analyst Shekhar Pramanick agreed.	    "In our view, the recent gains in the semiconductor equipment stocks are unlikely to hold given the fact that actual business fundamentals continue to hold given the fact that actual business fundamentals continue to deteriorate."	    Shekhar said for investors with a 12-18 month investment horizon "there could be attractive appreciation potential for equipment stocks."	    Thomas Weisel's Ross, however, said "the stocks are close to the bottom."	    "Though we remain cautious in the near term, our long-term outlook has been heightened in light of emerging data points pointing to a late calendar 2001 and calendar 2002 recovery," he said.	    Ross is looking for a further two quarters of industry order declines, "possibly leveling off into the second calendar half of 2001 before orders recover again."	    He said investors would do well to pick up the shares "particularly on dips, in anticipation of a strong calendar 2002".	    Banc of America Montgomery Securities analyst Mark FitzGerald said: "The best buying opportunities will occur sometime over the next two to five months."	    "The (book-to-bill) ratio is a lagging indicator and stock prices in the group are now reflecting a lot of bad news," FitzGerald said, adding he expects the book-to-bill ration to continue to post a "sharper decrease" over the next 3-5 months "tracking the shortfall in bookings that has already occurred." 	    Prudential's Pramanick also expects orders to continue their slump until "the late summer time frame."	    "We expect bookings to continue their decline in the upcoming quarter, as the outlook remains bleak, although the rate of decline may ease a bit," Pramanick said.	    Although "continued weakness in fundamentals is nothing new," Pramanick believes "there remains further downside risk to our overall capital expenditure plans (estimate) for the semiconductor industry." The analyst said capital spending this year may decline by as much as 25-30 pct from last year's level.	    Deutsche Banc Alex. Brown's Timothy Arcuri, however, takes a more bearish stance on the sector.	    "We do not see the data as indicative that the bottom is near." 

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