Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Wally Mastroly who wrote (6947)	7/19/1999 10:10:00 AM
From: Justa Werkenstiff	Read Replies (2) \| Respond to of 15132

NVLS From Briefing FWIW: Novellus Systems Inc. (NVLS) 71 3/8 -3 31/64: This manufacturer of advanced automated wafer fabrication systems for the semiconductor industry posted mixed Q2 results this morning. While earnings of $0.31 per share were in line with Wall Street expectations and 24% ahead of Q1 results, Q2 earnings were down 32.6% from a year-ago. Likewise, sales for the period came in at $130.9 million, up 14% on a sequential basis, but off 8.3% from a year-ago. This may not be good enough given that the stock rose more than 3 1/2 points on Friday in anticipation of good earnings results and has been trending higher over the past couple of weeks on the perception that a true recovery in the semiconductor sector is well underway. The recovery may well indeed be underway as quarter to quarter results indicate. However, sales and earnings still trail year-ago levels by a significant margin and are not expected to match last year until later this year. This leaves Novellus in a precarious position should the recovery stall or slow from its current capital spending pace. Novellus is currently expected to marginally exceed last year's earnings of $1.51 per share, but year 2000 earnings are projected to almost double. Hence, the stock is currently trading at a 48 times trailing multiple, but only 25 times projected year 2000 earnings. While the semiconductor equipment business has always been in a boom or bust cycle, a lot rides on the boom period enabling Novellus to again be a dominant player. However, the company is betting big that copper will be the mainstay of the semiconductor industry and that the current rebound will be enough to get the company on the faster track. Unfortunately, the latest earnings report does not provide much confirmation on the latter point, especially if the rebound should slow or stall during the second half of the year. Hence, the stock has opened lower this morning - RN