Novellus Says SARS Has Got It Down This Quarter

Novellus Systems(NVLS - Cramer's Take - Stockpickr) today reiterated its complaint that the SARS (severe acute respiratory syndrome) epidemic in Asia is dragging down business, though rivals haven't voiced similar concerns.

"I wish we could be more optimistic about the quarter we're in today, but the volatility is still there and the uncertainty is still there," said President Peter Hanley.

After hours, Novellus shares lost 29 cents, or 0.9%, to $31.88. Earlier, on a day that saw robust gains across techland, the stock had gained a healthy $1.10 or 3.5%.

The comments on SARS came as the semiconductor-equipment maker endorsed guidance given on its last earnings call. The company said in April it expects flat sequential revenues and earnings of 9 cents a share for the second quarter, a forecast that fell short of the Wall Street consensus estimate at the time of 5 cents a share in earnings.

"SARS concerns in the second quarter have slowed bookings," said Hanley, citing the difficulty of travel to the region and greater caution on the part of customers. He added, in response to an analyst's question on the conference call, "Frankly, I can't explain why our competitors aren't seeing the same things we are."

"I don't think [SARS] is going to change end demand long term," he explained in response to another question about how SARS affects Novellus. "[But there are] people sitting there saying, should I aggressively ramp my factory or should I hold back and ramp only to the level I have to meet the demand I see."

Hanley added: "That caution I believe is going to overheat this thing when it finally turns out."

Though many analysts have thrown up their hands on the idea of a second-half rebound, Hanley issued a heavily qualified forecast noting potential upside. "We look for strengthened bookings in the second half of the year but visibility remains poor. Several 300 milimeter fabs could drive significant second half upside but order timing remains uncertain."