Does it get more interesting than this?  What a quarter.  That one felt like a whole year!  Wow!    

A jump into the fray to make a few pithy comments about the debacles taking place in the financial industry is hardly worth the effort.  There are zillions of websites out there just waiting to link you to the latest headlines and to serve up a dire forecast.  We view it rather simply, "The great cleansing/deleveraging is here and it is going to be with us for a while.  How long?  Hard to say.  It's ugly out there." 

Over three years ago we started writing about the problems on the debt front and the impact it would have on the semiconductor industry.  Our focus was primarily on the housing market and the correction, if you want to call it that, took a lot longer to get started than we expected.  Most likely it will take longer than we expect to conclude. 

Honestly, none of this is surprising.   

In the background the groups that follow the semiconductor industry have been passing out revisions to their annual forecasts.....  It's only been three months since ISS and the newswires have been peppered with revisions from the major forecasting firms.  Yes, the semiconductor cycle is coupled closely with the ups and downs of economic cycles.  Question is, how far ahead are stock investors willing to look?  We've got our eye on the leading economic indicators because they are linked to the health of final sales.   When they turn, we will be more confident about a lasting change in the industry's prospects and a stronger rally in the stocks.

We are hearing that many decision makers are "Frozen like a deer in the headlights."  Anyone that has control of a checkbook appears to be on hold.  Capital spending, from what we understand, is still slowing and will likely remain that way until we get well into the second quarter. 

In the meantime, there's plenty of re-organization taking place - notable is that Intel (INTC) and STMicroelectronics (STM) finally got the Numonyx deal completed.  We're hearing that Texas Instruments (TXN) is close to embarking on a major league program to consolidate manufacturing facilities.  Others are forming partnerships - Micron (MU) has signed several technology exchange agreements in the recent months. 

Quietly, a number of fabs in the US are shutting down and that is causing a buildup of tools in the used capital equipment markets.  Some of our friends in the equipment business have been saying that the only business they have on the books right now is in the used equipment market. 

We'll be talking about this arena in future notes.          

We have a few charts that we watch closely and though the data lags by a month - February's semiconductor sales numbers came out earlier this week - we find that they are useful in assessing the major trends.  To stay in step with what is happening today, we spend a lot of effort digging around in the trenches to assess business conditions.