Novellus Calms Slowdown Fears

Updated from 6:23 p.m. EDT

Novellus(NVLS Quote - Cramer on NVLS - Stock Picks) said orders for its chipmaking equipment would fall within a slightly lower range than it initially expected, but expressed confidence that spending on semiconductor equipment was not at risk of drying up.

In a midquarter update after Wednesday's market close, the San Jose, Calif., company stuck to its sales and earnings estimates for the third quarter. Novellus said revenue is expected to be up 7% to 10% sequentially, or between $440 million and $450 million, while EPS will range between 49 cents and 52 cents.

The average analyst estimate calls for Novellus to earn 50 cents a share on revenue of $447.1 million, according to Thomson First Call.

But bookings, orders for future purchases of equipment, are now expected to be flat to up 5% sequentially during the third quarter. In July, the company had predicted that orders in the quarter would be flat to up 7% sequentially.

"Overall, we feel pretty good for this quarter, and we think that we have a pretty good handle on visibility on the business through the end of the year," said CEO Richard Hill in a conference call with analysts.

Shares of Novellus rose 0.9%, or 25 cents, to $28 in extended trading.

There has been concern that the chip-equipment industry could be nearing the peak of a cycle. Earlier this month, industry group SEMI reported that worldwide billings in the second quarter rose to the highest level since 2001, at $9.56 billion.

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