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Novellus a Bit More Cautious

Third-quarter bookings could fall as much as 10%, but the company affirms its profit forecast.

SAN FRANCISCO -- Semiconductor-equipment maker

Novellus

(NVLS)

warned that the company may see a shortfall in orders from large customers in Korea in the third quarter.

During a midquarter update after the markets closed Thursday, the San Jose, Calif., company said key customers in Korea are worried about a "consumer-led recession" in the U.S. caused by problems in the subprime mortgage market and falling home values that could undermine "America's piggybank."

To brace investors for a slowdown, Novellus widened the range of possible third-quarter bookings to $299 million to $349 million. This range means the company could see bookings fall as much as 10% or rise as much as 5% from the previous quarter.

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Initially, the company had seen a decline of no worse than 5%.

Chairman and Chief Executive Rick Hill sought to reassure investors that any slowdown in bookings would be temporary and that fundamental demand forces remain intact.

"This is just a matter of typical pausing to make sure

Korean chipmakers are on the right target," Hill told analysts during the conference call. "I don't see this as a long-term issue."

Novellus affirmed its third-quarter revenue and profit guidance. The company expects to earn 39 cents to 42 cents a share on revenue of $380 million to $395 million.

Analysts' average estimates call for earnings of 39 cents a share and revenue of approximately $390 million. Novellus also expects its gross profit margin to be 49% to 50%, in line with its earlier forecast.

Novellus shares initially fell on the news but were recently unchanged at $27.16, where they closed during regular trading.