NVLS mid quarter update
August 31, 2011, 5:01 PM ET NVLS Cuts Q3 Revenue View; Caution On Weakening PCs
Shares of chip equipment maker Novellus (NVLS) are down 28 cents, or 1%, at $27.69 after the company this afternoon raised its profit outlook for its fiscal Q3 ending in September, while cutting its revenue estimate below consensus.
Q3 revenue is now seen in a range of $300 million to $320 million, down from a prior $300 million to $340 million range, while EPS is seen in a range of 65 cents to 75 cents, up from a prior range of 60 cents to 75 cents. Analysts on average have been modeling $322 million and 68 cents a share.
On the call, CEO Rick Hill remarked that since the company’s Q2 call on July 12th, Novellus customers have “become more cautious” as a result of “persistent weakness in consumer PC demand in developed markets.”
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Following on the heels of the lower-than-expected guidance from Applied Materials just a short week ago, Novellus provided investors with a mid-quarter update after the close of today’s trading session.
In a nutshell: Customers of Novellus have become incrementally more cautious and they have curtailed their expansion plans. CEO Rick Hill said a contagion developed amongst the customer base that was spawned by the nervousness that gripped some members of the sector in July (during Semicon West). This weakness or, fear, was described as the confidence level device makers have for end demand out nine months from now. Given the way orders are trending it is, in essence, a vote that says device makers have no confidence in the economy.
Other highlights:
9.3% growth in the PC market for this year seems reasonable but those customers have been more cautious. DRAM pricing is weak and demand is also weak. On the other hand, logic (microprocessors) still seem reasonable because of diversity in their application. Not all the markets look terrible, smartphone and tablet forecasts continue to look robust. NAND continues to be a bright spot. Semiconductor utilization rates remain below seasonal levels Novellus expects spending for wafer fab equipment in this year to be in the range of $30 to $32 billion and expect demand to be pushed in to ’12. Guidance: For Q3 expect bookings to be down 15% to 30%. Guidance for shipments and revenues was narrowed to $300 to $320 million
EPS $.65 to .75 to the high end with the Q3 tax rate being a major influence.
forbes.com
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