Enough With the Doom and Gloom-It's An Election Year…

I edited a story yesterday for our mid-month Mobile Display Report, with the headline: "LED Sector Has Weak Q4 Order Visibility" translation: company buyers are reluctant to make commitments on mid-to long-term "buys" because of all the shakiness in world-wide markets. But here are the underlying facts of the LED sector.
Key companies are coming off record quarters. The actual text in the story says, "Driven by demand from handset applications, the LED sector started to see an increase in sales during August. Many players expect their revenues to hit records in September, and October sales to stay strong."
For example, "sources at Everlight Electronics (Taipei, Taiwan, www.everlight.com) said the company's September revenues will hit a record of $32.81M and October revenues will stay at a high level. Everlight pointed out that current order volumes for October are around the same levels as in September and, with additional rush orders, monthly revenues will continue to increase." The company's Q3 revenues are projected to rise to $92.6M, with overall utilization will reach 70% - 80% while utilization rates for handset-use BLUs have surpassed 80%. Profitability for the third quarter will be better than that for the second quarter.
On the equipment supply side for the LED sector, growth in orders has indeed pulled back "as the industry takes a wait and see attitude toward the uncertain economy." But even here delivery of orders for Metal-Organic Chemical Vapor Deposition (MOCVD) equipment is growing. "Taiwan's total MOCVD capacity was expected to increase by 100 units to 300 units in 2008, but now the increase is likely to be only 60 to 70 units, DigiTimes reported.
So the rate of growth in new capital equipment for the LED sector is down, not growth itself. And the reason may not even be related to the bureaucratic meddling with our economy but rather the industry coming off record capex investment in 2007.
"When in Q4'07 we announced record sales, we already pointed out that the market will need a 'digestion phase.' This is where we are now." said Guido Pickert, investor relations manager for Aixtron, which claims to control about 70% of the global market for the MOCVD equipment.
During tough times, it may be easy to simply add fuel to the fire by positioning stories with a doom and gloom attitude. But I'm getting tired of it all. OK, so we've had a "melt-down" and the security of the US banking system is ranked 40th by the World Economic Forum, behind Barbados, Estonia and Namibia. That comes from bureaucrats meddling with the free market, in an attempt to "socialize risk" an act akin to letting the marketing guy run engineering (OK, not quite as bad as that but you get the idea.)
But back here in display land and most industry sectors, we have yet to see two consecutive quarters of negative growth (a recession), let alone anything like a depression. Sure folks are cautious going forward as the headlines and machinations continue to trumpet the gloom and doom perhaps in a self-fulfilling prophecy that seems to come around just about every major election year. So rather than get worked up over all the equity suddenly vaporized from my 401K I'll just borrow from a past president and say, "It's an election year --(stupid)".