Novellus ( NVLS) said second-quarter earnings rose fivefold from a year ago, thanks to margin improvement leveraged to robust semiconductor-equipment demand that Wall Street worries is peaking . The San Jose, Calif., company earned $37.8 million, or 25 cents a share, in the three months to June 26, up from $7.4 million, or 5 cents a share, last year. The latest quarter included an acquisition-related charge, excluding which the company earned $43.9 million, or 29 cents a share. Second-quarter sales were $338.2 million, up 41.5% from last year. Excluding the charge, analysts surveyed by Thomson First Call had been forecasting earnings of 26 cents a share on sales of $331.3 million in the latest quarter. The stock was nevertheless down $1.41, or 4.5%, to $29.64, a level that leaves it about 28 times the 2004 First Call consensus of $1.06 a share and 18 times the 2005 estimate of $1.63 a share. The stock is currently at the low end of the $30- to $35-a-share range it has inhabited since selling down from nearly $45 in January. Novellus reported second-quarter shipments of $366.1 million, representing a sequential increase of 17.7%, while deferred revenue rose 18.2% from the first quarter to $181.1 million at June 26, 2004. The company's gross margin was 50.5% in the most recent quarter, up from 44.1% in the year-ago period. Total operating expenses were 34.5% of sales in the 2004 period, compared with 42.2% a year ago. "Bookings are strong and we continue to experience operating leverage to drive superior financial results for our shareholders," the company said. "Novellus is experiencing further strengthening of its 300-millimeter market penetration, particularly in advanced copper applications, due to our technological excellence and a continued focus on productivity." The semiconductor equipment space was the subject of negative research Monday by Merrill Lynch. Other stocks falling included Applied Material ( AMAT), ASML ( ASML) and Intel ( INTC).