Novellus Systems said Tuesday its first-quarter earnings would be lower than expected and its revenue would be at the low end of its forecast range, sending its shares down more than 7 percent.
The semiconductor equipment maker cited multiple factors including a shortfall in spending in the memory chip market, an unfavorable product mix, a change to its revenue recognition practices in Europe, higher manufacturing costs and a higher-than-expected tax rate.
Novellus forecast net income between 15 cents a share and 17 cents per share compared with its previous range of 21 cents to 24 cents, announced Feb. 28.
It said first-quarter revenue would be at the low end of its expected range of $315 million to $325 million.
Analysts on average had expected net earnings of 23 cents a share on revenue of $319.4 million, according to Reuters Estimates. Novellus shares fell 5 percent to $22.61 in pre-market trade.
"When we look at what has happened to us here it's a combination both of what's happening in the market place and a self inflicted wound," an executive said on a conference call with analysts referring internal revenue recognition changes.
On the same day that chipmakers such as Hynix Semiconductor forecast a recovery in pricing for computer memory chips, Novellus cited weakening spending by makers of dynamic random access memory (DRAM), used mainly in personal computers.
"We're seeing a less certain capex spending market in the memory business," an executive said on the call, adding that if there was a recovery in pricing it was slow.
The company also said that market conditions had continued to weaken since the beginning of March.
Jeff Benzing, Novellus executive vice president, listed several factors for the earnings shortfall in a statement.
These included "a less-favorable-than-expected product mix combined with higher manufacturing spending" in industrial applications and "a larger than expected inventory write-down" for semiconductor evaluation units and a tax rate increase.