Chip equipment supplier Novellus Systems
Revenue came in at $397 million, good for a gain of 7.8% from the previous year. Gross margin also rose to 49.1% from 45.8% last year. The higher revenue and gross margin drove operating margins significantly higher, to 17%, up from just 8% a year ago. The effect on its net income and earnings per share is encouraging -- net more than doubled to $54 million from $25 million last year and EPS rose to $0.42 from $0.19.
The year-over-year performance looks impressive, but Novellus's outlook for the future is more important. Unfortunately, that future looks hazy at best. If you've been paying attention, you know that memory customers' spending has driven the chip-equipment industry, but memory prices -- NAND Flash, NOR Flash, and DRAM -- are in the toilet this year.
Novellus doesn't disclose what fraction of its business comes from memory customers, but at Lam Research
While Lam claims that the outlook for memory spending is bright, Novellus seems less sure. Although management tilted toward bullishness, as you would expect. CEO Rick Hill is encouraged: NAND Flash prices have stabilized a bit, and he expects Microsoft's
We'll have to wait and see what happens. NAND flash pricing should stabilize, since it's used in gadgets like Apple
Falling memory prices took a bite out of Micron.
SanDisk was hurt by falling NAND Flash pricing.
Seagate is having a tough time too.
Despite the memory troubles Lam had a good quarter.