($44)..NVLS Q4 profit handily tops expectations
(Recasts lede, adds relative performance, analyst comment,
outlook)
SAN JOSE, Jan 16 (Reuters) - Novellus Systems Inc.
<NVLS.O>, which makes equipment for manufacturing computer
chips, on Tuesday reported fourth-quarter results that handily
beat expectations, but noted orders will drop in 2001 due to a
decline in corporate spending.
The company said it will be hurt by an overall decline in
capital spending by microchip makers, but that it expects to
rebound later in 2001 as companies begin to order more advanced
equipment that can lower production costs.
Novellus said in a call with analysts it expects
year-over-year orders to go down 15 percent in 2001, Nikolay
Tishchenko, an analyst with ABN Amro, said.
In after-hours trading on Instinet, Novellus shares
regained what they lost in regular trading, rising to $42-7/8.
Under new accounting regulations that changes the way the
company recognizes revenue, Novellus said its fourth-quarter
net income was $94.2 million, or 69 cents a share.
Pro-forma net income using the accounting method that it
had previously used was $104.4 million, or 76 cents a diluted
share. That is up from $33 million, or 27 cents a diluted
share, in the fourth quarter of 1999.
Those pro-forma results for the latest fourth quarter
topped the consensus analyst forecast of 70 cents a share,
according to First Call/Thomson Financial.
"They turned in a great quarter," Fred Wolf, a capital
equipment analyst with Adams, Harkness & Hill, said.
The change in its accounting method led to cumulative
deferred revenue of $432 million at the end of 2000,
representing the difference between what the company has
shipped and what it is able to recognize under new guidelines.
Novellus also forecasted net income of 68 cents a share for
the first quarter ending in March, including the effect of its
acquisition of Gasonics International Corp.
Novellus's backlog reached $575.7 million at the end of
2000, up 75 percent from the end of 1999, the company said.
Shipments in the fourth quarter were $425.1 million, it said.
Although chipmaking equipment firms are likely to post
strong results due to large backloads, new orders from
semiconductor-maker customers could dry up because of a slowing
economy, crimping results in the next six months.
Tishchenko said Novellus will have an opportunity to regain
market share from industry leader Applied Materials Inc.
<AMAT.O>, as chipmakers seek out new contracts for machines
that can deposit more advanced materials onto chips and that
can handle larger silicon wafer sizes.
Before the company's earnings announcement, Novellus shares
closed at $38-3/4, down $3-13/16, or 8.96 percent, on Nasdaq.
It is off a 52-week high of $70-1/4.
Shares of Novellus have outperformed the Philadelphia
Semiconductor Index <.SOXX> by about 5 percent since the
beginning of last year.
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REUTERS
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