Electronics industry fundamentals being ignored warns Future Horizons

Malcolm Penn (pictured), Future Horizon's chairman and ceo, says May's results mean Q2 will show at least 8.3% quarterly growth over Q1, increasing the full year growth forecast to 36%. Penn noted: "Given last year's growth was -9%, mathematically this is a classic industry cycle. It is NOT." Penn believes that at this point in the 'recovery', it is much more important to look at sequential and quarterly growth rates rather that the 12:12 rates. "Given the high double digit rates they show are just as misleading and irrelevant as the high double digit negative rates from this time last year," he explained. "The reality is they net each other out thereby highlighting the real nature of the current cycle. This downturn was a pause, the recovery a restart, it was not a classic SC bust and boom. Future Horizons first publicly announced the recovery was underway in April, it also sent out a warning that industry was cutting back existing capacity far too much and too fast, whilst simultaneously failing to invest in net new capacity. Penn warned: "Our clear message always was that these two factors were a recipe for disaster. The disasters are now starting to happen. "Whilst we obviously do not expect firms to run their business based on what we say, if the market recovery really has taken firms by surprise, executives from the top down either failed to recognise the significance of the data we were drawing their attention to over the past 15 months or they simply made the decision to ignore it. Ignore the industry fundamentals at your peril."