Novellus Systems Inc yesterday said it will meet its forecast for orders this year.
Credit Suisse First Boston's John Pitzer isn't so sure.
The analyst slashed his 2002 earnings estimate for the semiconductor-equipment maker by 79 percent. He's not expecting Novellus's revenue to improve because a turnaround in computer-chip demand isn't yet on the horizon, he wrote in a report to clients.
"The industry will not have a robust recovery," Pitzer said in an interview. Novellus's expected 24 percent order decline in the third quarter is evidence that the business isn't "bouncing along a bottom."
That view reflects a disparity on Wall Street about when the semiconductor industry will pick up. With chips in everything from greeting cards to cars, investors are watching for an industry rebound because it may signal higher corporate earnings and a rising stock market.
On Aug. 1, Merrill Lynch & Co said the worst may be over for the stocks and raised its rating on 19 chip and chip-equipment makers. CSFB countered the following week, saying that chip demand won't rebound for at least a year and that the stocks were selling for 20 percent to 30 percent more than they should.
The Philadelphia Semiconductor Index fell 7.1 percent this month and is down 2.4 percent this year. Shares of Novellus fell US$2.42, or 5.2 percent, to US$44.31.
Pitzer is now skeptical that Novellus can produce the 27 percent increase in orders necessary to meet its 2001 target. The company might even post a fourth-quarter decline in orders from the previous period, he said. Its customers include Intel Corp.
Pitzer, who rates Novellus a "hold," reduced his 2002 earnings estimate to US$0.26 a share from US$1.25 and his profit expectations for this year to US$1.33 a share from US$1.41.
Accounting rules changing how companies recognize revenue will also drag on profits, he said in the report. The Securities and Exchange Commission now requires companies to book revenue when customers accept a product, rather than when the companies ship it.
Current ``revenue reflects shipments that were made four to six months ago when business was relatively strong,'' Pitzer said.
Revenue figures early next year will be based on orders four to six months prior when business was worse, he said.
Pitzer has the lowest Novellus 2002 profit expectations on Wall Street. Earnings estimates for next year run as high as US$2.05 a share, according to Thomson Financial/First Call.
"It's a difficult environment out there given the slowing economy," said Christopher McHugh, who helps manage US$10 billion at Turner Investment Partners, which holds 800,000 shares of Novellus. Investors will have a harder time evaluating the company "given the wide range of estimates on Wall Street" and ``not knowing what is going to happen with bookings and backlogs,'' he said.
Pitzer, 33, is one of five of the 26 analysts who track Novellus that don't recommend buying the stock. Of 16 who published reports on Novellus today, only Robertson Stephens analyst Susan Billat cut her rating, to "buy" from "strong buy."
"Investors should take profits and not add to positions right now," Pitzer said, noting that he opted not to lower his rating to "sell" because he reduced it earlier this month.
"They will get better buying opportunities next year."
GAINING STEAM: The scheme initially failed to gather much attention, with only 188 cards issued in its first year, but gained popularity amid the COVID-19 pandemic Applications for the Employment Gold Card have increased in the past few years, with the card having been issued to a total of 13,191 people from 101 countries since its introduction in 2018, the National Development Council (NDC) said yesterday. Those who have received the card have included celebrities, such as former NBA star Dwight Howard and Australian-South Korean cheerleader Dahye Lee, the NDC said. The four-in-one Employment Gold Card combines a work permit, resident visa, Alien Resident Certificate (ARC) and re-entry permit. It was first introduced in February 2018 through the Act Governing Recruitment and Employment of Foreign Professionals (外國專業人才延攬及雇用法),
RESILIENCE: Deepening bilateral cooperation would extend the peace sustained over the 45 years since the Taiwan Relations Act, Greene said Taiwan-US relations are built on deep economic ties and shared values, American Institute in Taiwan (AIT) Director Raymond Greene said yesterday, adding that strengthening supply chain security in critical industries, enhancing societal resilience through cooperation and deepening partnerships are key to ensuring peace and stability for Taiwan in the years ahead. Greene made the remarks at the National Security Youth Forum, organized by National Taiwan University’s National Security and Strategy Studies Institution in Taipei. In his address in Mandarin Chinese, Greene said the Taiwan-US relationship is built on deep economic ties and shared interests, and grows stronger through the enduring friendship between
CAUTION URGED: Xiaohongshu and Douyin — the Chinese version of TikTok — are tools the Chinese government uses for its ‘united front’ propaganda, the MAC said Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) yesterday urged people who use Chinese social media platforms to be cautious of being influenced by Beijing’s “united front” propaganda and undermining Taiwan’s sovereignty. Chiu made the remarks in response to queries about Chinese academic Zhang Weiwei (張維為) saying that as young Taiwanese are fond of interacting on Chinese app Xiaohongshu (小紅書, known as RedNote in English), “after unification with China, it would be easier to govern Taiwan than Hong Kong.” Zhang is professor of international relations at Shanghai’s Fudan University and director of its China Institute. When giving a speech at China’s Wuhan
ENHANCE DETERRENCE: Taiwan has to display ‘fierce resolve’ to defend itself for China to understand that the costs of war outweigh potential gains, Koo said Taiwan’s armed forces must reach a high level of combat readiness by 2027 to effectively deter a potential Chinese invasion, Minister of National Defense Wellington Koo (顧立雄) said in an interview with the Chinese-language Liberty Times (sister newspaper of the Taipei Times) published yesterday. His comments came three days after US Secretary of State Marco Rubio told the US Senate that deterring a Chinese attack on Taiwan requires making a conflict “cost more than what it’s worth.” Rubio made the remarks in response to a question about US policy on Taiwan’s defense from Republican Senator John Cornyn, who said that Chinese
RSS