Investors fretting over signs of a potential letup in chip-equipment demand didn't find any proof of it in

Novellus Systems'

(NVLS)

midquarter update.

Instead, the chip-equipment maker company hoisted bookings guidance to $275 million, up from the $250 million forecast from its March 2002 quarterly conference call. It left its revenue forecast unchanged at $220 million.

Novellus also raised its quarterly earnings estimate by 2 cents to 8 cents a share, a penny above Street estimates. CFO Kevin Royal cited an across-the-board increase in gross profits and improved expense controls for the better earnings outlook. Estimates for the company were for earnings of 7 cents a share on $213 million in revenue, as gathered by Thomson Financial/First Call.

Investors appeared unimpressed, nudging the stock down 2.3% in after-market trading. In the regular session Tuesday, Novellus closed up 49 cents, or 1%, to $46.67.

Novellus said nothing to alleviate investor concerns about a second-half slowdown in the industry, restricting comments to the current quarter. Only last week, citing evidence of a drop-off in demand from foundries, Goldman Sachs analyst James Covell

downgraded a host of chip-equipment stocks, including Novellus.

But CEO Richard Hill said he hadn't noticed signs of a slowdown, such as orders being canceled or pushed out. "We are seeing an upturn that's been largely fueled by consumer demand. Sustainability depends upon renewed corporate confidence and spending, and early indications are that is beginning to happen," said Hill, adding that government IT spending would help.

Responding to a question about future quarters, Hill said sustainable sequential revenue growth is probably somewhere in the double digits, driven by an industry migration to new chip-equipment technologies.

But Hill added that while he was pleased with the level of order growth, he still wasn't satisfied with overall order levels. "All types of factors will bode well for the industry as a whole, but it's yet to materialize fully that we could say, 'Yep, we're off to the races.' "