Earnings Preview: Novellus Systems

| About: Novellus Systems, (NVLS-OLD)

Novellus Systems (NASDAQ:NVLS-OLD) is expected to report Q4 earnings after market close Wednesday, February 4, with a conference call scheduled for 4:30 pm ET.

Guidance

The consensus estimate is a loss of (17c) for EPS and $189.47M for revenue, according to First Call. On Novellus' November 20 mid-quarter update the company lowered their Q4 guidance to $207M to $217M for revenue, EPS to a loss (6c) to break-even, bookings to down 25% to 35%, shipments to 185M to 200M, and gross margins of approximately 42%.

Analyst Views

Many analysts were not surprised by the lowered guidance. Caris commented that they thought Novellus would become an acquisition target if the economy deteriorates further and they think it will be among the first to rebound when the economy improves. Stifel Nicolaus said they do not expect any surprises regarding Q4, but they do expect a sharp decline in its Q1 outlook, which would be in line with its peers, notably Lam Research (NASDAQ:LRCX) and Varian Semiconductor (NASDAQ:VSEA), who have already reported earnings and lowered guidance. Like many of its peers, Novellus is taking additional restructuring measures to lower its break-even level. The firm suspects that management will highlight some of these moves on the earnings call. Stifel will monitor the company's actions related to its venture in the CMP market, which they believe has been a failure to now. While Stifel has been encouraged by the company's recent actions to improve its margin profile, the firm believes market share issues remain versus Applied Materials (NASDAQ:AMAT), and with the current depressed market environment.

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Tagged: , Semiconductor Equipment & Materials, Earnings
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