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Technology Stocks : Novellus
NVLS 2.400+2.1%Jul 24 5:00 PM EST
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To: Sam Citron who wrote (3570)5/6/2005 12:17:19 PM
From: Cary Salsberg  Read Replies (1) of 3813
 
RE: "From our standpoint, this is not something
new as the company has struggled over the
past two years internally on the execution front. In
particular, the company has underperformed its
peers (namely, Applied Materials and Lam
Research) in terms of its margins and operating
leverage."

I will list the last 5 quarters of gross margin, R & D %, and operating margin for NVLS and AMAT and the last 7 for LRCX. This is what Merrill Lynch has, now.

NVLS (starting with most recent)
45.3 49.9 48.4 50.2 47.4
18.3 18.1 16.4 18.8 22.4
11.8 15.5 18.1 17.4 08.8

AMAT
44.4 46.6 47.4 46.5 43.5
13.6 11.3 11.5 12.1 15.6
21.5 24.4 27.4 25.5 17.0

LRCX
50.0 52.4 51.2 49.0 45.8 45.0 42.6
13.5 12.4 12.0 15.2 18.6 20.4 21.0
24.3 28.6 28.9 21.7 11.1 06.7 03.1


It is evident that NVLS's gross margins are about the same as LRCX and AMAT, but R & D and SGA have driven operating margins much lower. R & D and SGA are costs more closely linked to new product development while gross margins more closely reflect production efficiencies and competitive pricing pressures.
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