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Technology Stocks : Novellus -- Ignore unavailable to you. Want to Upgrade?

To: 16yearcycle who wrote (1336)	1/19/1998 8:35:00 PM
From: Henry Eichorszt	Read Replies (1) \| Respond to of 3813

TO ALL:GOOD NEWS FROM NOVELLUS -SMART MONEY ÿ MARKET INSIDER Good News From Novellus AFTER REPORTING better-than-expected fourth-quarter earnings Monday morning, Novellus Systems (NVLS) should get a lift when stock markets open Tuesday. The semiconductor-equipment maker reported net income of 64 cents a share when analysts surveyed by First Call expected 63 cents. Net sales were $163 million, a 56% gain over the year-ago period. That hardly sounds like a report from a company whose stock price has been slashed from a high of 66 3/8 last October to a close of 31 1/4 on Friday. The problem is that Novellus, one of our "Ten Stocks for the Year 2000 and Beyond," reaps 25% of its sales from the Pacific Rim, and investors have been petrified that the Asia crisis will slow the market for its products. Monday's report should help ease some of those fears. During the last week of the fourth quarter, Novellus did have to delay some Korean shipments when customers failed to get letters of credit guaranteeing payment. But so far, that's the biggest damage the company has seen. In a conference call with analysts following the earnings announcement, chief executive Richard Hill said he anticipates flat growth in the first quarter of '98 and thinks it could stretch into the second quarter. For the year, however, the company predicts revenue growth of 15%. "While we are cautious for the next quarter or two," Hill said, "we feel the longer-term prospects for the business are still very good." How will that sit with Wall Street? That's a wild card given that most analysts and portfolio managers were taking the day off to celebrate Martin Luther King Jr.'s birthday. But David Wu, an analyst with ABN AMRO Chicago, is pleased. "If you tell me the worst case for Novellus is that the second quarter could be flat, I'd say the Asian Flu isn't that bad," Wu says. "This is about as good as you are likely to see from a company like this. Given Korea, the performance is very good." That doesn't mean Wu expects the stock price to spike upwards. He warns that it will be hard to get a clear picture of Asia's effects on any sector for another couple of months. "It all depends on Taiwan and Korea in the next 90 days," says Wu. "If those things don't look worse than they do now, the stock will go up." The report delivered plenty of signs that bode well for the future. Sales in Europe and America are booming, and analysts should be encouraged by the state of Novellus's order book. At year-end, the company had a record backlog of $224 million, an increase of 43% from a year ago. Although about 40% of that is from Asia and Japan, "We did go through the numbers with a fine-tooth comb and, to the best of our knowledge, it is solid," says Hill. In 1997, total order bookings jumped 21% from the previous year. The book-to-bill ratio was better than one to one, with about 40% of bookings from the U.S. Major customers Intel ( INTC), Motorola (MOT) and Advanced Micro Devices (AMD), meanwhile, have all announced capital spending figures ahead of what Novellus was forecasting. During the conference call, analysts grilled management on margins, which have narrowed since last year's purchase of the thin-film division Varian Associates (VAR). The company's gross margin currently sits at 54.9%, but Hill insisted that he can increase that number to 56% by 1999. -- By Amey Stone << SMI MARKET NEWS ARCHIVE Contact SMIÿÿÿÿ Helpÿÿÿÿ Searchÿÿÿÿ Get Quoteÿÿÿÿ Sponsorsÿÿÿÿ Toolsÿÿÿÿ Site Map SmartMoney Interactive c 1997-1998 Dow Jones & Company, Inc. All Rights Reserved. All quotes delayed by 20 minutes. Delayed quotes provided by PC Quote. \| Previous \| ------ \| Respond \| View SubjectMarksBookmark this Subject Return to Semiconductors One or more words separated by spaces: Subject Titles Only Full-Text Messages with Links Send questions and feedback to webmistress@techstocks.com Terms of Use

To: 16yearcycle who wrote (1336)	1/19/1998 9:20:00 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 3813

Gene: You are right IMO although it was ceratinly confusing. The 15% figure was cited as a goal of the business model to grow the top line year over year. He said with the "product portfolio coming out this year NVLS should be able to achieve that" (period). No time frame was set -- they were talking in terms of generalities. Otherwise, how could they project 15% growth on the one hand and no visibility on the other hand into 2Q? (He said they were not going to predict a downfall in Q2 either but given the Asian uncertainty, they would not forecast out that far because they "do not have the visibility.") That 15% does not sound like a conservative cautiously optimistic forecast in that light and that was what they were selling in the cc. Moreover, they said the "Asian sitiation puts a question mark on how the year will turn out." He said:" How that would work out, when it will work out and the extent to which it will work out is unknown to us at this time." The 15% projection for 98 over 97 does not make a whole lot of sense in this context. They did say they were planning for a flat 1Q with sequential growth year over year afterwards but gave no guidance with respect to percentages. But then again, I see Smart Money listened to a different conference call than me <g>. But maybe they interviewed Hill separately??