Integrated process control system developer for the semiconductor industry

Nova Measuring Instruments

(Nadsaq:NVMI) on Wednesday released its first quarter results for 2001, showing revenues of $9.3 million. This represents a 41% decline over revenues of $15.8 million for the previous quarter, and a 6% increase over revenues of $8.7 million reported for the corresponding quarter in 2000.

The company also reported a gross profit of $3.5 million (38% of sales) for the quarter, compared with gross profit of $8.0 million (51% of sales) for the previous quarter, and $4.6 million (53% of sales) for the same quarter last year.

Net loss for Q1 2001 was $2.3 million, compared with a net income of $1.6 million in the fourth quarter of 2000, and a loss of $188,000 in the corresponding quarter last year.

First quarter 2001 results include stock based compensation expenses of $611,000. Excluding those expenses, net loss was $1,674,000, or 12 cents per share.

Research and development expenses, net, were $3.4 million, 36% of total revenues in the first quarter of 2001, as compared to $3.7 million, or 24% of total revenues in the fourth quarter of 2000, and $2.9 million, 33% of total revenues in the first quarter of 2000. These expenses represent the company's development efforts in introducing several new integrated process control systems and solutions.

When it came to sales and marketing expenses the company decreased its expenditure to $2.1 million, or 23% of revenues in the first quarter of 2001. That's in comparison to $2.7 million, or 17% of total revenues in the fourth quarter of 2000, and $1.5 million, or 17% of total revenues in the first quarter of 2000. The firm says these expenses represent its efforts to penetrate new territories and gain strategic accounts.

The company says that its financial results reflect the general slowdown in the semiconductor equipment market, with some order cancellations, delays, and expenditure revisions of some its semiconductor clients. With the continuing poor market visibility for the full year, the company says it has implemented a cost reduction plan, which includes a freeze on hiring, shutdown days, a 15% salary cutback for management, and tight expense controls.

Despite the slowdown, the company says it is continuing its investment in research and development, and in the evaluation of its multiple new integrated products. The firm believes that this will enable it to benefit from the large retrofit opportunities, and from the long-term growth potential of the semiconductor industry. The new products include integrated solutions and APC for Copper CMP, CVD, Photolithography and Etch.

"In the previous downturn periods, when the global capital expenditure was reduced, the investment in retrofit of existing process equipment for technology upgrades and higher efficiencies increased significantly. The current fast transition from the rapid growth of 2000 to the current slow-down, does not yet provide adequate visibility...Nevertheless, our multiple evaluations of current and new products are moving ahead with high potential in the new and retrofit market," said Nova President and CEO Giora Dishon.

He added that the firm's outlook for 2002 and possibly towards the end of 2001 is positive, with new products expected to contribute to the company's anticipated revenue growth.