nvls article:
(my comment: the last sentence is the most important. I wonder how far below 1:1 the btb was. Beating estimates (that have been sharply reduced), by cutting costs, is not a good portent for the future. Those costs will go back up as soon as business improves. What are they going to do next quarter? Sales will be lower, so are they going to cut costs further? Are they cutting R&D? Are they going to stay ahead of AMAT in copper?)
Novellus Quarterly Net Fell 62%,
But Beats Wall Street Estimates
Dow Jones Newswires
October 12, 1998
SAN JOSE, Calif. -- Novellus Systems Inc., which warned earlier that restructuring costs would reduce third-quarter earnings, Monday managed to deliver Wall Street a pleasant surprise despite reporting a 62% drop in third-quarter net income, as results weren't as bad as expected.
Novellus, which makes automated wafer fabrication systems for the semiconductor-manufacturing industry, said net income came to $7.6 million, or 22 cents a diluted share, in the quarter, down from $20.1 million, or 57 cents a diluted share, last year. Sales in the quarter fell 31% to $106.7 million.
But the company was able to reduce its sales and marketing costs in the third quarter by 17%, to $12.5 million. This helped keep the earnings decline much less severe than the drop to 12 cents a share that analysts had been fearing.
As a result, Novellus shares rose $5.8125, or 25%, to $28.875 in midday trading Monday after the release of the earnings report.
Novellus, which has been suffering under a long-term slump in the semiconductor industry that only lately has shown signs of stabilizing, said in late July that would trim 20% of its work force -- stepping up previous plans to reduce employment by 10% -- and take other cost-reduction measures, resulting in a third-quarter charge of approximately $5 million.
In its earnings report, the company provided no additional information about the charge. It did, however, report income from operations of $11.2 million in the latest quarter, indicating that the actual charges taken during the period reduced net income by $3.6 million.
Novellus valued its cash and short-term investments at $111.3 million at the end of the quarter, up 4% from the second quarter. The company also said it failed to achieve a 1-to-1 book-to-bill ratio for the third quarter.
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