Novellus Expects 3Q Orders to Climb 14%
Monday July 21, 8:06 pm ET
By Mark Boslet, Of DOW JONES NEWSWIRES
PALO ALTO, Calif. (Dow Jones)--Novellus Systems Inc. offered an upbeat outlook for business conditions this year and said orders would climb 13.9% in the third quarter.
The San Jose, Calif., manufacturer projected that a rebound in the moribund market for equipment used to make semiconductors is possible. "There is a potential for a sustained upturn," Chief Executive Richard Hill said on a conference call.
Novellus shares rose in after-market trading on the comments to $34.88, up 33 cents, or 0.96%.
To a large degree, second-quarter results reported Monday met expectations. Net income of $7.4 million, or 5 cents a share, was down 38% from $12 million, or 8 cents, last year.
But revenue rose 7.6% to $239.1 million from $222.1 million last year. Quarterly orders were $193 million and ahead of the company's projection. Wall Street was looking for earnings of 5 cents and sales of $237 million, according to Thomson First Call (News - Websites).
Hill said revenue in the third quarter would come in at $220 million and that the company would post break-even results after incurring a 4 cent-a-share charge. Orders, however, would rise to $220 million, he said.
In the third quarter, business in Japan was the "bright spot," Hill said. However, a 60-day to 90-day lag in Japanese buyers taking title to the equipment would depress sales in the third quarter. Wall Street had been expecting $229 million.
Analysts said the prospect of an upturn helped the company's stock. "I think the comment about a pickup in the second half was encouraging," said Raj Seth, an analyst at SG Cowen Securities. Seth does not own shares in Novellus, and Cowen does not conduct banking business for the company.
On the conference call, Hill said Novellus would look closely at reducing its work force if a sustainable upturn fails to materialize in a quarter or 1 1/2 quarters.
He also said he has not been convinced by Microsoft Corp.'s (MSFT) move away from stock options to restricted stock. Restricted shares are best used selectively to retain key workers at a company, he said.
To broadly give away stock doesn't make sense, he said, adding that he was surprised there hasn't been more "kicking and screaming" from the investment community. |
