Company chief executive officer C. Scott Kulicke said the downturn appears to be "a classic semiconductor downturn" after dramatic growth in new capacity in 2000. "Barring any major macroeconomic shift, this scenario will most likely lead to a bottoming out of capital spending in the next quarter or two," he told financial analysts today in a conference call after the release of K&S results.

The world's largest supplier of chip-packaging tools posted a net loss of $11.7 million--including charges for two acquisitions in the fourth quarter--and revenues of $155.4 million.

"In light of recent news about a slowing global economy and how this will likely affect the semiconductor industry, our revenue and earnings visibility remains unclear," cautioned Kulicke, who is CEO and chairman of K&S. "Our best estimate for the second fiscal quarter, ending March 31, calls for revenues to be in the range of $145-170 million, including the test business," he said while releasing the results.

Late last year, the Willow Grove company moved into the test business by acquiring Cerprobe Corp. for $225 million in cash (see Oct. 12 story), and Probe Technology Corp. for $65 million in cash (see Nov. 14 story). The purchases fit into K&S's strategy to build complete solutions for backend assembly and testing operations.

The company said its first fiscal quarter results included about one month of revenues from the acquired test systems operations. Acquisition-related costs resulted in one-time charges of $15.8 million in the fiscal quarter.

If K&S had not acquired the two test systems companies, its revenues for the quarter would have been $141.1 million, according to officials. The company said its full-diluted earnings would have been $0.05 per share compared to Wall Street estimates of breakeven. A year ago, K&S reported revenues of $179.8 million and a net income of $12.8 million in the fiscal quarter.

New orders in the just-ended fiscal first quarter were $115 million, including one month of bookings from the new test division, compared to $207 million in the period a year ago, said K&S.

During today's conference call with analysts, Kulicke said the industry does not appear to be slowing in terms of unit demand. "Wafer starts in frontend chip-processing fabs are not off by very much," he said. Most of the softness in K&S's sales and orders has been concentrated in wire bonder systems, said the CEO.

If the industry is not driven deeper into a downturn by economic problems or other unexpected events, Kulicke believes orders for new backend assembly systems and test tools will "re-accelerate" in the second half of 2001. But he said chip executives and suppliers should be watching what the U.S. Federal Reserve says about economic conditions.

"That's the wildcard," Kulicke said.

--J. Robert Lineback