SAN FRANCISCO—Fab tool maker Novellus Systems Inc. Wednesday (Aug. 31) narrowed its third quarter sales target to the low end of previously guided range as the company's CEO warned that customers were being "incrementally cautious."
In a scheduled mid-quarter update, Rick Hill, Novellus chairman and CEO, said Novellus now expects to report third quarter sales of between $300 million and $320 million, compared to a range of $300 million to $340 million provided in July. But Hill also narrowed Novellus' third quarter guidance for pro forma earnings per share to between 65 and 75 cents, the high end of the previously guided range.
Hill said Novellus expects third quarter bookings to decline between 15 and 30 percent compared with the second quarter. The company now expects overall wafer fab equipment spending for 2011 to be between $30 billion and $32 billion.
Hill said Novellus believes that persistent weakness in consumer demand in developed markets makes current unit forecasts by industry research firms of 9.3 percent PC growth for 2011 "fairly realistic." Hill said the PC demand weakness has caused customers to become "decidedly more cautious."
Overall capacity utilization rates among customers remain below seasonal norms, and DRAM selling prices continue to decline, Hill said.
But Hill said NAND memory demand remains strong. Novellus believes average selling prices for NAND parts will remain above unit cost, mostly because of consumer demand for smartphones and media tablets. Hill said Novellus has also seen a slight uptick in foundry capital utilization rates recently.
Hill said the "incremental caution" among customers started in July by one or two big semiconductor companies and that others have followed suit. "When everybody sees what the big players are doing, everyone follows suit," Hill said.
Also Wednesday, semiconductor test equipment supplier LTX-Credence Corp. reported sales for the quarter ended July 31 and provided guidance for the current quarter that fell below consensus analysts' expectations.
LTX-Credence (Milpitas, Calif.) reported sales for the fourth quarter of its fiscal 2011 or $62.7 million, up 7 percent from the previous quarter and down 14 percent compared with the year-ago quarter. Analysts had expected the company to report sales for the quarter of about $65.6 million, according to Yahoo Finance.
For the current quarter, which closes Oct. 31, LTX-Credence said it expects sales to decline to between $35 million and $39 million. Analysts were projecting that the company's sales for the current quarter would be around $70 million, according to Yahoo Finance.