In a nutshell: Customers of Novellus have become incrementally more cautious and they have curtailed their expansion plans. CEO Rick Hill said a contagion developed amongst the customer base that was spawned by the nervousness that gripped some members of the sector in July (during Semicon West). This weakness or, fear, was described as the confidence level device makers have for end demand out nine months from now. Given the way orders are trending it is, in essence, a vote that says device makers have no confidence in the economy.
- 9.3% growth in the PC market for this year seems reasonable but those customers have been more cautious.
- DRAM pricing is weak and demand is also weak. On the other hand, logic (microprocessors) still seem reasonable because of diversity in their application.
- Not all the markets look terrible, smartphone and tablet forecasts continue to look robust.
- NAND continues to be a bright spot.
- Semiconductor utilization rates remain below seasonal levels
- Novellus expects spending for wafer fab equipment in this year to be in the range of $30 to $32 billion and expect demand to be pushed in to '12.
Guidance: For Q3 expect bookings to be down 15% to 30%. Guidance for shipments and revenues was narrowed to $300 to $320 million
EPS $.65 to .75 to the high end with the Q3 tax rate being a major influence.
This reminds me of an analogy that many industry veterans use to describe the way these cycles develop: "If I tell you it is bad and you tell someone it is bad, they tell someone else, and then that person tells someone, before you know it, it gets bad."
My $0.02 -- I don't think things are going to turn up until the early months of next year.,