Novellus News Items (3):
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Novellus warns of lower orders, possible losses
biz.yahoo.com
SAN FRANCISCO, Nov 29 (Reuters) - Chip-equipment maker Novellus Systems Inc. said on Thursday that fourth-quarter orders will be less than forecast and it may report losses in the first and second periods of next year as the company continues to struggle with a steep downturn in the semiconductor industry.
When Novellus, whose equipment builds circuits in chips, reported third-quarter results on Oct. 15, it said it expected fourth-quarter orders of $125 million to $150 million. Now, it expects orders of $105 million to $124 million, said Novellus Chief Executive Richard Hill on a conference call.
Sales will be $200 million, compared with forecasts of $200 million to $215 million, and shipments will be $165 million, a bit higher than the $160 million it had indicated earlier, Hill said. San Jose, California-based Novellus (NasdaqNM:NVLS - news) also reiterated its forecast for a per-share profit of 11 cents a share in the fourth quarter.
The company was forecast to earn 10 cents a share, within a range of 6 cents to 11 cents, according to Thomson Financial/First Call, on sales of $205 million. Analyst expect profits of 5 cents a share in the first quarter and 8 cents a share in the second quarter.
The reduction in the order guidance and the disclosure that it may lose money in the first and second quarters, rather than the profits that were expected, helped push the stock down in after-hours trading. Novellus shares fell to $38.40 in after-hours trade, after gaining $2.15, or 5.5 percent, to $41.60.
``We're obviously in a recession and the question is what's going to turn it around and when's it going to turn around,'' Hill said on the call. ``We believe the Novellus is the best bet in the market but it's all a function of the industry now.''
The company also plans to cut costs even further in order to reduce the level of sales it needs to break even, although it declined to specify how it planned to bring costs down, whether through job cuts or some other action, said Merrill Lynch analyst Brett Hodess.
Although the market for chip equipment is still particularly grim, when demand does resume, which many now forecast won't come until the latter half of 2002, Novellus should be as well positioned as any of its competitors, Hodess said.
``They should be in pretty good shape to see business grow at an earlier point than other companies,'' Hodess said. That's because Novellus is known for its lead in producing chipmaking equipment that can work with copper interconnections among transistors, rather than the more traditional aluminum ones.
``They're doing well from a competitive standpoint but clearly the market conditions are just very, very weak,'' Hodess said. ``Based on their comments on the call, they're probably doing about the same as their competitors, which is very poorly.''
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Novellus sees red after fourth quarter
marketwatch.com
SAN JOSE, Calif. (CBS.MW) -- Novellus said late Thursday it will hit its fourth-quarter earnings target of 11 cents a share because of expense reductions but the semiconductor equipment maker expects a loss next quarter.
The first-quarter losses could extend through the second quarter, the company told investors during a midquarter conference call. Shares (NVLS: news, chart, profile) fell 7.4 percent to $38.54 after the update.
"Fab utilization rates are still below rates to cause customers to go out in earnest and expand capacity," said Chairman and CEO Richard Hill. "They continue to invest in 300mm and copper and that seems to be the driver for the meager level of business we are seeing."
During the update, Novellus said its fourth-quarter revenue (SAB 101 compliant) should approximate $200 million, while bookings should be between $105 million to $125 million with shipments of $165 million. Deferred revenue is estimated at $140 million plus.
On average, analysts expected Novellus, which specializes in making deposition equipment, to earn 10 cents per share on revenue of $205.7 million for its fourth quarter, according to a recent survey by Thomson Financial/First Call. Novellus had set a bookings target of $125 million to $150 million and a shipments target of $160 million.
For the first quarter, analysts had expected earnings of 5 cents a share on revenue of $194 million. Hill declined to provide detailed targets, but he did say the company will reevaluate its cost structure.
As for possible job cuts, CFO Robert Smith said he "had nothing to announce at this time."
For the fourth quarter, Hill said his earnings goal will be met due to not paying annual bonuses to executives and not paying out profits.
Smith pegged his breakeven level around $150 million or $160 million, but expense cuts to come could lower that level by about $10 million.
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Novellus Doesn't See a Bottom for Chip Equipment
thestreet.com
Things still aren't looking up for Novellus (NVLS:Nasdaq - news - commentary - research - analysis).
The chip-equipment maker briefed the Street on its performance at the midpoint of the quarter, nudging several key expectations down and lamenting the continuing lethargy of the sector. On Oct. 15, Novellus projected fourth-quarter earnings per share of 11 cents and $160 million in shipments.
After market Thursday, Novellus stuck with the 11 cents-a-share profit and bumped up its shipment forecast to $165 million. However, the business outlook isn't rosy, as the company was forced to trim its expected fourth-quarter bookings from a previous estimate between $125 million and $150 million to a lowered range of $100 million to $125 million.
Novellus attributed the drop in bookings to the sober decision to take certain orders off the books rather than continually push them out. "We've seen some bottoming and reports of bottoming from our customers' customers," conveyed CEO Rick Hill. But he could not say the worst was behind the company.
Despite the continued attempts of chip-market enthusiasts to call the bottom of a markedly brutal cycle, Novellus prepped the Street for worse news. Based on current shipment and revenue levels, Novellus projected for the first time a loss in the first quarter of 2002, without giving specifics. Thomson Financial/First Call and Multex reports pegged analyst consensus for the first quarter of 2002 at 5 cents and 6 cents-a-share profit, respectively. Both report a 10 cents-a-share consensus projection for fourth quarter 2001 earnings, a number Novellus expects to beat by trimming executive bonuses and profit-sharing plans.
"This is one of the toughest businesses in the world. The cycles are so hard. It's one thing when the business slows 10%," said analyst Bryon Walker of UBS Warburg, who has no banking relationship with the company. "I care little about the loss. I'd rather they stay healthy with key people so they remain sound in the upturn."
Hill argued that when fab utilization levels get back to the 80% to 85% range -- he estimates they are at 70% currently -- customer orders will begin to return.
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