Novellus Guidance Unchanged; Discusses Weak Vista Demand on DRAM Prices

In the Novellus (NVLS-NASDAQ) mid-quarter update, the company says results are looking within expectations previously given and guidance is unchanged from January.  This was offered then as $0.40 to $0.44 EPS, $395 to $405 million revenues, 49% gross margins, orders down 5% to 10% & Shipments up 3% to 8% sequentially. 

What is interesting is that the company is claiming that demand for Windows Vista has been slow and has been impacting the price of DRAM.  These companies should all have known that this wasn’t going to be like a Windows 95 launch and it is sort of suspect that they might be using this as a hedge ahead of time in case things slow down any more.  The real flood for Vista won’t come in close to the launch date, and they’ll have to wait until later in the year.  You would think the suppliers would have known this based on their own channel checks and partner orders of Windows Vista, but maybe they aren’t drinking the industry cool-aid with others.

NVLS is down 0.65% at $31.99 in after-hours on light volume after closing up 1.4% at $32.20 in regular trading.  MSFT is actually trading flat after-hours and that is after closing up 1.1% at $28.18 on the day.

Jon C. Ogg
February 27, 2007

Jon Ogg is a partner in 24/7 Wall St., LLC and he can be reached at [email protected]; he does not own securities in the companies he covers.