Novellus Tells Us Q4 Was the Bottom
By Tish Williams
Senior Writer
02/28/2002 06:48 PM EST
Novellus (NVLS:Nasdaq - news - commentary - research - analysis) confirmed its suspicion that the December quarter was its down-cycle bottom, raising its estimates for the first quarter of 2002.
Painting a rosier outlook, Novellus believes it could possibly return to profitability in the second quarter, three months earlier than its predictions and Street expectations. The company plans to lose 9 cents a share in the first quarter, a penny better than its former guidance but in line with analyst consensus estimates as tracked by Multex.com. Wall Street currently expects a 4- cents-a-share loss in the second quarter.
The chip-equipment maker pointed to strength in its copper-process products, 300-millimeter lineup and 200-millimeter sales in China for a positive midquarter update delivered Thursday afternoon. Novellus had predicted $150 million in revenue on Jan. 22, but raised that figure to a range between $150 million to $160 million. Putting a potential second-quarter profit in perspective, Novellus has reported that it would take $175 million in revenue to get the company to the break-even point.
CEO Rick Hill said bookings are improving, and increased expectations from $130 million to a range between $130 million and $150 million, opening up the possibility that bookings could rise 36% from the fourth quarter's $110 million. A year ago, Novellus counted $458 million in revenue and a 62-cents-a share-profit in the first quarter of 2001.
"This is not a broad-based recovery at this point," Hill said. "But based on quoting activity, it's becoming broad-based." Hill articulated that quotes precede orders, however, and that heightened quote numbers may not affect first-quarter orders.
Hill delved into accounting detail to explain that the equipment vendors margins will be worse than he'd like, hitting the low 40% range in the first quarter, but would move to the mid-40s percentage range in the second quarter. Based on Novellus' move to comply with SAB 101 (Securities and Exchange Commission staff accounting bulletin) standards, the company will stagger revenue recognition while absorbing costs on some products.
Novellus said it was seeing some life after a long hibernation among its DRAM customers, jibing with recent data from computer makers that DRAM prices are rising and the sector has finally begun its journey back to health. Capital spending watchers will note that Novellus' announcement reinforces Intel's assertion that it would focus some of its $5.5 billion on the 300-millimeter equipment realm |
