What analysts are saying about Novellus
Mark LaPedus
10/15/2003 2:40 PM EST
URL: siliconstrategies.com
SAN JOSE -- The outlook among analysts for chip-equipment maker Novellus Systems Inc. remains mixed, following the company's lackluster results for the third quarter of 2003.
As reported on Tuesday (Oct. 14, 2003), Novellus reported sales of $221.1 million for the third quarter of 2003. The net loss for the quarter was $97.6 million, or minus $0.64 per basic share. The company took numerous charges in the period, but analysts believe the chip-equipment maker is struggling in several markets, especially chemical mechanical planarization (CMP) (see October 14 story).
In a report issued today (Oct. 15, 2003), Stephen O'Rourke, senior analyst with US Bancorp Piper Jaffray, lowered his sales forecast but raised his earnings estimates for Novellus of San Jose. "We are lowering our '03 and '04 revenue estimates to reflect a slower ramp, raising our '03 EPS estimate to $0.21 to reflect better cost control, and maintaining our '04 EPS estimates of $0.72," O'Rourke said in the report.
Novellus faces some issues on the product front. "We believe Novellus is best leveraged to the near-term secular trend of copper adoption, and we anticipate share gains in PVD, share losses in dielectric CVD, a stagnant market position in CMP, and incremental share loss in ECP," he said.
In Q3, meanwhile, Novellus beat O'Rourke's estimates of breakeven, when the company reported earnings per share of $0.04. Revenue and orders of $221 million and $220 million, respectively, were in line with estimates, he said.
Novellus provided Q4 order guidance of 5-to-10 percent growth, which was also in line with the analyst's estimates. The big question for Novellus is order growth and when are they coming?
"We note an incrementally positive bias toward orders expectations and do see significant orders potential in Q1'04 from Samsung L13, TSMC F14, Renasas, Elpida, and Matsushita," he said. "Furthermore, we believe that both capacity constraints and anticipated competitive pressures from the principle Chinese foundry should help drive orders from the Taiwanese foundries early in 2004."
In 2004, Novellus is expected to see a sequential revenue ramp of 9-to-10 percent, generating about 19 percent revenue growth year-over-year, he said.
Cristina Osmena, an analyst with Needham & Co. Inc. of New York, had a slightly different view of Novellus in a report issued today. "We are increasing our estimates for 2003 and 2004 and maintaining our rating of hold," Osmena said in the report.
The analyst had concerns about Novellus' Q4. "Despite higher orders, revenue guidance for Q4 was flat to down 5 percent," she said. "We believe that the greater concentration of business in Asia, Japan in particular, has lengthened the acceptance period. EPS in the fourth quarter is forecast to range from $0.02 to $0.07 per share, with the best guess estimate at $0.05 per share."
Byron N. Walker, an analyst with UBS Securities LLC, was slightly more bullish about Novellus. "In summary, Novellus had a good quarter," he said. "While we are fine-tuning some of our forecast assumptions, there is no change to our 4Q03, CY04 or CY05 EPS estimates." |
