Novellus posts Q3 loss amid reported CMP woes
By Silicon Strategies
10/14/2003 5:15 PM EST
URL: siliconstrategies.com
SAN JOSE -- Amid concerns about its product efforts--especially in chemical mechanical planarization (CMP)--Novellus Systems Inc. today (Oct. 14, 2003) reported sales of $221.1 million for the third quarter of 2003. This was down 7.5 percent from $239.1 million in the previous quarter, and down 4.1 percent from $230.5 million in the like period a year ago.
The net loss for the quarter was $97.6 million, or minus $0.64 per basic share, compared with a profit of $7.4 million in the previous quarter, and third quarter 2002 net income of $4.1 million.
Shipments of $210.3 million in the third quarter of 2003 represent a decrease of $16.2 million, or 7.2 percent, from $226.5 million reported in the prior quarter. Deferred revenue at the end of the third quarter was $103.5 million, a decrease of $10.9 million, or 9.5 percent, from $114.4 million at the end of the second quarter.
The results are reportedly due in part to setbacks within the CMP sector, according to analysts. And as previously announced, Novellus implemented a restructuring plan to align its cost structure with current business conditions. The restructuring plan resulted in a pre-tax charge of $59.8 million in the third quarter, which is composed of $44.0 million for inventory, $7.9 million for asset write-offs, $4.1 million for facilities, and $3.8 million for severance. It also recorded a non-cash, after-tax charge of $62.8 million as a cumulative effect of change in accounting principle.
"The pace of both the recovery in the semiconductor equipment industry and the crossover to 300 millimeter tool sets required us to restructure the company in the third quarter," said Richard S. Hill, chairman and chief executive of Novellus, in a statement. "We believe our actions will improve our earnings performance as the industry upturn continues to firm," Hill said.
There is good and bad news for Novellus. "We expect fourth quarter order guidance will be for growth in the order of 5 percent," said Cristina Osmena, an analyst with Needham & Co. in New York, in a report on Novellus issued today.
Analysts still remain concerned about Novellus' CMP efforts. Last year, Novellus acquired CMP tool specialist SpeedFam-IPEC Inc. for $220 million, but the San Jose-based chip-equipment is still struggling in the market.
"Novellus has the old SpeedFam legacy tools for 150/200-mm called the Avanti series and the newer Momentum series of tools for 200/300-mm," said Vijay Rakesh, an analyst with investment banking house Berean Capital Inc., an investment banking firm in Chicago.
"But the Momentum tool is being redesigned and Novellus is involved in some beta testing in house," he said. "So between Novellus and Lam almost sitting on the sidelines, Applied Materials is gaining a lot of CMP traction," he said. Lam Research Corp. is also struggling in CMP, while Applied Materials Inc. continues to dominate the marketplace, he added.
Some believe the problems are even deeper at the company. Novellus "is grappling with product issues in CMP, strip, and dielectric CVD, which has weighed on profitability," added Needham's Osmena, in the report. "Furthermore, we have grown increasingly concerned about the market share threat posed by the introduction of a new copper electroplating tool by Applied Materials." |
