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Technology Stocks : Novellus
NVLS 2.400+2.1%Jul 24 5:00 PM EST
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To: Doughboy who wrote (2119)4/8/1999 5:36:00 PM
From: Dave Chanoux  Read Replies (2) of 3813
 
I have no facts. Maybe I should just shut-up.

But I can't. So here is an opinion.

Two things bother me about such a rumor:

1. H & Q is Novellus investment banker who took the secondary offering to the market last month. They should not be saying anything at all at this time. If they said anything it would be self-serving due to their position.

2. Novellus closed Q4 98 with their smallest backlog in a long time. I don't remember the number, but I remember thinking at the time I heard the conference call that it was really small. It takes time to get orders, build them, ship them to recognize revenue. If the backlog coming into the quarter had been better, I would be more positively inclined.

Bob Smith made some comments in February (1/3 to 1/2 way through the quarter) to the effect that $5M of unexpected orders showed up. If one were to assume 50% gross margin and 35% tax rate, no change in fixed expenses then $2.2 M goes to the bottom line or about $.06 per share. (Somebody check my numbers before you get mad at me).

Rick Hill's comments in the conference call implied flat revenue Q4 to Q1. Q4 eps was about $.25 (give or take few cents). Does $.25 + .06
"blow away earnings"?

I could be wrong. I usually am in this kind of situation. We will see next week.

Regards,

Dave Chanoux
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