Novellus Systems Inc. (NVLS) swung to a first-quarter net loss
as the semiconductor-equipment maker reported $21.4 million in
charges, related primarily to a tax change, and slumping revenue
and margins.
Semiconductor manufacturers have seen few signs of rising demand
for computers, phones and electronic devices that use chips.
Novellus said last month it saw weakness spread across all regions,
and Chief Executive Richard Hill said the memory market had
"virtually stopped investing."
On Wednesday, Novellus reported a net loss of $66.4 million, or
69 cents a share, compared with year-earlier net income of $15.5
million, or 15 cents a share. The latest results include a $19.4
million charge as a result of a tax change law in California, where
the company is based. It also recorded $2 million in charges to
align its business with the economic downturn.
Excluding items, the quarter's loss would have been 47 cents a
share, compared with year-earlier earnings of 16 cents.
Revenue slumped 69% to $98.9 million.
Last month, the company said it expected results to come in at
the low end of its February outlook, which called for a per-share
loss of 45 cents to 60 cents on revenue of $95 million to $110
million.
Gross margin slumped to 26% from 46.1%.
Bookings dropped 5.9% to $77.8 million from the fourth quarter,
while shipments slumped 48% from the fourth quarter to $92.1
million. Backlog adjustments were $10.6 million, compared with
$44.9 million in the fourth quarter.
Hill said the economic environment continues to be challenging,
but said the company was "cautiously optimistic that our customers'
order activity levels have stabilized and are beginning to rebound,
although still at relatively low levels compared to our
expectations."
Chip tool makers such as Novellus rely on the capital spending
budgets of chip manufacturers. They have suffered throughout the
downturn as most chip makers have cut production due to weakening
demand.
The company also announced on Wednesday in a filing with the
Securities and Exchange Commission that it planned to terminate its
$150 million credit pact. The five-year pact was originally entered
in January 2007, and the company said it didn't incur any early
transaction penalties.
Shares fell 0.1%, or a penny, to $17.25 in after-hours trading,
after closing up 3.7% in the regular session. The company's stock
has rebounded recently from a 52-week low of $10.26 in
November.
-By John Kell, Dow Jones Newswires, 201-938-5285, john.kell@dowjones.com