NVLS ($48.50-$54) PE=60 Cap=8bil winning analyst praise on forecasted 2nd Qtr guidance of 6c
50.40 +1.69: -- Update -- Call just concluded... tone from NVLS management was pretty upbeat throughout call and most analysts commended NVLS for its Q1 performance and Q2 guidance... NVLS +4.34 at 54
Novellus First-Quarter Sales Tumble
By Daniel Sorid
NEW YORK (Reuters) - Novellus Systems Inc. (NasdaqNM:NVLS - news) roused the slumbering semiconductor equipment industry on Monday by forecasting hefty order growth for the second quarter, even as it recorded a first-quarter sales drop of 63 percent.
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The first chip equipment maker to report its earnings for the first quarter, San Jose, California-based Novellus appeared to convince Wall Street that the industry's 18-month slump has given way to a new cycle of growth -- and potentially very strong growth.
``The customers come back in slow trickles first,'' said James Covello, the chip equipment analyst at Goldman Sachs. ``Right now, it looks like the floodgates are opening up a little bit.''
Shares of Novellus soared in after hours trading to $53.85, up 7 percent from the 4 p.m. close of $50.40. Shares of industry leader Applied Materials Inc. (NasdaqNM:AMAT - news) rose along with Novellus, reaching $53.53, up 4 percent from a close of $51.44.
As the builders of the tools used to make and test the microchips that run computers, mobile phones, and other electronics, chip equipment makers have been hit especially hard by global economic weakness and a sharp drop in chip prices. Once-abundant orders for new equipment slowed sharply, and in some cases screeched to a halt.
Orders may now be set for a strong recovery, at least according to Novellus predictions.
Novellus reported first-quarter net orders of $175 million, far above its earlier projection of between $130 million to $150 million. The company predicted further growth in orders in the second quarter, up 43 percent to $250 million.
Quarterly net sales -- which usually reflect orders made several months prior -- tumbled to $169.7 million from $458.7 million a year ago.
Orders are the preferred measure of industry growth for many chip equipment analysts, reflecting more current business conditions than sales. Accounting rules prevent chip equipment makers from recognizing revenue until it builds the product and the customer receives and accepts it.
The company also forecast a second-quarter profit of 6 cents a share, above Wall Street average estimate of a loss of 1 cent a share, as measured by research firm Thomson Financial/First Call.
QUARTERLY LOSS, BEFORE SPECIAL ITEMS
Novellus reported a first-quarter loss of $3.3 million, or 2 cents a share excluding a one-time net special benefit and a gain on the sale of an investment. After the effect of the special items, Novellus said it earned $3.8 million, or 3 cents a share in the first quarter of 2002.
In the year-ago quarter, the company earned $82.1 million, or 55 cents a share.
Shipments were $147.1 million in the first quarter, down from $162.4 million in the fourth quarter.
``The first-quarter results were achieved because the semiconductor industry has begun to show improvement in capital spending,'' Novellus chairman and chief executive Richard Hill said in a statement. |
