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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Robert who wrote (31500)	7/19/1999 3:05:00 PM
From: Xpiderman	Respond to of 70976

Novellus Shares Fall On Its Cautious Outlook - The momentum swing on copper has moved to Applied Materials SAN FRANCISCO (Reuters) - Novellus Systems Inc. (Nasdaq:NVLS - news), a maker of semiconductor equipment, reported on-target second-quarter earnings Monday, but its stock fell due to cautious comments the company made about fourth quarter revenues in a conference call, analysts said. Novellus reported second quarter net income of $12.4 million, or 31 cents a share, down from $16.1 million or 46 cents a share a year ago. Its earnings were exactly in line with expectations. Revenues were down 8.3 percent to $130.9 million, versus revenues of $142.8 million in the year-ago period. But on a sequential basis, revenues were up almost 14 percent from $115.2 million in the first quarter of 1999. ''The semiconductor industry continues to show significant signs of improvement, as it benefits from continued economic strengthening worldwide,'' said Richard Hill, Novellus's chairman and chief executive, in a statement. He said that the company's momentum is continuing with new products that will enable chip firms to manufacture chips with finer geometries. But Novellus's shares tumbled almost 10 percent, falling $7.4375 to $67.75, in active trading on the NASDAQ, after the company's conference call Monday morning with analysts. ''The biggest thing people don't like is they were a little more cautious about the fourth quarter,'' said Mike O'Brien, a Soundview Technology Group analyst. ''Most people had double-digit revenue growth for the fourth quarter (on a sequential basis). They are guiding (expectations to) 3 to 5 percent (revenue) growth from the third quarter.'' Officials at Novellus, based in San Jose, Calif., were not immediately available for comment. The semiconductor equipment industry is now developing products to make computer chips using copper as the interconnect element, instead of aluminum, for faster chips. At the same time, chip makers are starting to move toward so-called 300 millimeter technology, which will yield more chips per wafer than the current 200 millimeter technology. O'Brien said that he is getting the sense that Novellus, which was the first company to unveil systems to make chips using the faster copper technology, is losing its lead on copper to industry behemoth Applied Materials Inc. (Nasdaq:AMAT - news) . ''I think it's because of the momentum on copper,'' O'Brien said, of the company's fourth quarter forecast. ''Applied is getting people to look more heavily at their copper plating tools...The momentum swing on copper has moved to Applied.'' ''Revenues, gross margin and SG&A (sales, general and administrative costs) were all in line, but R&D (research and development) was $1.3 million above our estimate,'' said Gunnar Miller, a Goldman Sachs analyst, in a note to clients, adding that the higher research spending was likely due to new copper product launches and development of 300 millimeter products. Shares of Santa Clara, Calif.-based Applied were off 31 cents to $78.25. Analysts pointed out that most semiconductor equipment stocks had a big run-up ahead of earnings and last week's SEMICON West industry trade show.