Best-Breed-Bellwether#1 – Oracle
Best-Breed-Bellwether#2 – Accenture
Peter Rowell, Exec Chairman of Regent (the tech M&A specialists) emailed to point out that one of his ‘favourite’ bellwethers was the Semiconductor’s industry Book-to-Bill ratio produced by Semi – the trade association for the industry. As Peter says “these guys are right at the front end of the food chain. In other words they supply the equipment …to build the chips …which go into the systems …that run the software …that require the services…etc.”
A ratio >1 indicates that (three month moving average) forward orders exceed (three month moving average) billings – ie that the market is expected to grow. According to Semi the ratio has been less than 1 (effectively) since mid 2006. In Nov 08, (see Semi’s 18th Dec 08 Press Release) the ratio managed to get back to 1. Before you become ecstatic with joy, it’s worth remembering that billings were only $805m in Nov – down from a high of $1782 in mid 2006 and an even higher $3b for several months in those wonderful days of 2000.
If one was being really optimistic, you might read into these figures that a nadir has been reached. Sales have reached a low point and the only way is up. But one month does not make a recovery though! However, if this was repeated for say three months, then I might allow a sigh of relief.