Forget about the bright spot of news from
, which Tuesday forecast a surge in new chip-equipment orders for the current quarter. Wednesday, irritated investors were hung up on what they didn't hear: the outlook for chip-equipment orders in the second half of the year.
CEO Richard Hill wouldn't make forecasts beyond the current quarter. Failing to get much enlightenment from Hill, the surly bunch of investors booted Novellus down 5.92% in midday trading, likewise punishing chip-equipment makers
3.45%. Meanwhile, the Philadelphia Stock Exchange Semiconductor Index (SOX) was trading down 3.22%.
The stock declines came despite the fact that Novellus yesterday
hiked its order guidance for the June quarter from $250 million to $275 million, representing a 57% increase over the previous quarter.
But after months of wishful talk about a second-half recovery, a dribble of near-term good news doesn't cut it with impatient investors. "D-Day for a second-half recovery in end markets
is still murky," said a research note out this morning from Deutsche Bank analyst Timothy Arcuri, who downgraded the stock two weeks ago.
Yesterday Hill said that sustainable sales growth depends on a recovery in corporate IT spending. He had no guidance on when it would pick up. So far, the company's upturn in orders had been fueled by consumer demand.
Still, the CEO also said that, assuming the current level of demand continues, expected quarterly bookings could reach about $350 million over the next several quarters.
That would represent a 27% increase from the company's new second-quarter guidance of $275 million. Reached by phone today, CFO Kevin Royal said that forecast doesn't presume an increase in corporate spending.
The Street didn't seem to be buying that arithmetic. Without more capital-expenditure increases from chip companies, Novellus will find it a "challenge" to show meaningful sequential order growth in the September quarter, wrote Gregory Konezny, an analyst at U.S. Bancorp Piper Jaffray, in a research note.
"This is not to say we are changing our opinion regarding our belief that we are in the early stages of a multiyear cycle," he said, "just that we may see a pause in order growth later this year until a broader chip recovery drives the next leg of the cycle."