Novellus Shifts Q3 Bookings "To Accurately Reflect Our Uncertainty"

In a mid-quarter conference call with analysts Thursday afternoon, Novellus (NVLS) CFO Bill Kurtz said the company now thinks bookings for the third quarter could be in the range of up 5% to down 10%. That is a broader range than the semiconductor equipment maker’s previous forecast of plus-or-minus 5%.

In essence, Novellus is saying it sees more potential downside than it did when it provided the original guidance at the time it reported second quarter results.

The company maintained its guidance for other measures, and still sees shipments of $370 million to $385 million, revenue of $380 million to $395 million, gross margin of 49%-50% and EPS of 36-39 cents with options expenses, or 39-42 cents without options expenses.

On the call, CEO Rich Hill said the shift in bookings guidance “is to accurately reflect our uncertainty and the related uncertainty of our customers.” He said that “the general worry is a combination of things that would affect the U.S. economy,” including the sub-prime loan issue, the fall in median home prices and the potential for tax increases. In essence, the company’s customers are worried about a consumer-led recession. In particular, Novellus noted concerns about demand from its Korean customers - Samsung and Hynix, presumably - and with foundries.

Satya Kumar, an analyst with Credit Suisse, responded Friday morning by trimming estimates slightly; for the fourth quarter, he slices EPS to 35 cents from 34 cents; he repeated his Neutral rating and $27 price target on the stock, close to the current level.

Patrick Ho, of Stifel Nicolaus, repeated his Sell rating on the stock Friday morning, asserting that bookings are likely to come in toward the bottom of the range, and cautioning that “there continues to be much uncertainty in the capex environment.”

Needham’s Robert Maire writes Friday that he likes the story long term, but maintains his Hold rating, and advises investors to “wait to see some firmer signs of positive momentum.”

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