Nice chart on NVLS showing the "volatile" action of this stock during the past few months. In early Jan the stock bottomed around 30, then took off to hit a high around 42 and now it is down to around 30 again. On April 27, NVLS came out with their quarterly report which was a real downer in the market's eyes. This is what Dow Jones had to say about the report.
[Novellus 1Q Net More Than Doubles But Gives Weak 2Q View
5:38 PM ET 4/27/11 | Dow Jones
NEW YORK (Dow Jones)--Novellus Systems Inc.'s (NVLS) first-quarter profit more than doubled as sales surged, but the semiconductor tool maker projected weak second-quarter results due to worries about the impact of the Japan earthquake and macroeconomic factors.
The earthquake, tsunami, and ensuing nuclear crisis in Japan have highlighted the global dominance held by many of that country's makers of electronic components, and raised concerns that disruptions to their production could cause shortages and price spikes for products such as memory chips and liquid crystal display panels.
While many semiconductor-related companies--including Novellus--say they haven't yet been hurt by Japan, Novellus Chairman and Chief Executive Richard S. Hill on Wednesday said the impact on the industry will be more severe in the second quarter and potentially the third.
"Japan is a vital organ in the electronics supply chain," Hill said during a conference call. "It's just difficult to believe damage at the scale that it's at won't have some ripple effect that we can't fully see."
Shares, up 31% over the past 12 months through Wednesday's close, dropped 4.7% to $33.06 in after-hours trading.
Hill said two primary customers have pushed out orders by at least a quarter, leading him to project a 10% to 25% sequential decline in second-quarter bookings. Shipments are seen flat to down 10% from the first quarter.
In addition, Hill said second-quarter earnings should be 65 cents to 80 cents on revenue of $330 million to $372 million. Analysts polled by Thomson Reuters most recently projected earnings of $1 a share and revenue of $403 million. Gross margin should be 50%, plus or minus 1%.
Hill said uncertainty about the U.S. government's budget woes and geopolitical events in the Middle East and other locations are also causing concerns in the tech industry. Still, he remains bullish about the full year and said end-market demand is "really good."
Novellus, a maker of tools used in semiconductor manufacturing, saw sharp improvement in its financial results last year, which benefited from a rebound in demand for personal computers, cellphones and other tech gadgets. It is seen as one of the biggest beneficiaries from chip giant Intel Corp.'s (INTC) ramped-up capital spending.
Chief Operating Officer Timothy Archer said personal computer demand remains strong, but tablet and smartphone forecasts "may have gotten ahead of where actual shipments ended up for actual devices." Nevertheless, he expects the mobile devices to remand a strong driver for the industry going forward.
Novellus posted a profit of $96.4 million, or $1.04 a share, up from $41.3 million, or 43 cents a share, a year earlier. The year-earlier result included charges of 4 cents a share.
Net sales jumped 50% to $413.2 million.
The company had predicted per-share earnings of 95 cents to $1.10 on $395 million to $425 million in revenue.
Gross margin widened to 50.4% from 48.5%.
Bookings, a closely watched indicator of future business, edged up 1.1% from the fourth quarter. Shipments slid 9.8% sequentially.]
So the market thought that was a very bad situation, and as your chart shows, NVLS is now down about 5 dollars a share to just about the level of early Jan. Not everyone however, thought NVLS is in "bad shape". S&P came out the next day, 4/28 and said this:
[S&P REITERATES BUY RECOMMENDATION ON SHARES OF NOVELLUS SYSTEMS
8:15 AM ET 4/28/11 | S&P Marketscope
NVLS posts Q1 operating EPS of $1.04, vs. $0.47, matching our estimate. Sales rose 8% from Q4 and the gross margin was flat at 50%, both near our view.
While we project bookings to fall 10%-25% in Q2, we think memory and logic push-outs are likely to be temporary. In addition, we see DRAM capital spending resuming later this year and acting as a catalyst.
We positively view cash flow generation. We cut our '11 operating EPS forecast by $0.44 to $3.72 and '12's by $0.31 to $3.85. However, we increase our target price by $3 to $41, on P/E near peers applied to our '12 estimate.]
So here we have S&P saying the TP is near the level reached by NVLS in early March. If you believe this scenario, the positive thing to do now is jump in and ride the next wave up.<g |
