Novellus loses $130M in 4Q amid computer chip woes

Novellus Systems Inc. swung to a fourth-quarter loss that was worse than management had anticipated as sales of the company's computer chip-making equipment plummeted amid the deepening recession.

The San Jose-based company lost $130.3 million, or $1.36 per share, during the three months ending in December. That marked an about-face from a profit of $52.9 million, or 47 cents per share, in the same period of 2007.

Most of the loss stemmed from a $99.5 million write-down on the money that it doled out for acquisitions that turned into its industrial applications group. Novellus also absorbed a series of charges, including $12.2 million to cover severance payments for workers who recently were laid off in a cost-cutting move.

Even without those one-time items, Novellus said it would have lost 21 cents per share _ more than management expected in a bleak forecast made in November. Analysts surveyed by Thomson Reuters had predicted the company would lose 17 cents per share, excluding the write-down and one-time charges.

Revenue in the period plunged 48 percent to $188.5 million from $363.5 million. The next few months are unlikely to get much better, with Novellus's fourth-quarter bookings dropping by 41 percent from the third-quarter volume.

Investors winced, causing Novellus shares to fall 88 cents, or 6.4 percent, in extended trading after finishing the regular session at $13.77.

Novellus is feeling the ripple effects of weakening demand for personal computers and other technology products that rely on computer chips. That downturn is curtailing chip production, lessening the need for Novellus' equipment.

"There is great uncertainty in the outlook for the worldwide economy, which is out of our control," said Richard Hill, Novellus' chief executive. "Therefore, our focus will remain on the factors within our control."

Hill plans to curb spending to help Novellus survive on less revenue. He already has reduced Novellus' payroll by about 10 percent, or 350 jobs, and agreed to cut his salary in half.