UPDATE 2-Novellus Q2 lags Street view but CEO bullish

* Q2 loss ex-items of 41 cents a shr vs Street view 38 cents

* Shares dip 3 pct before slight rebound

* CEO sees Q3 revenue up at $150-180 million

(Adds CEO, analyst comments, updates shares)

By Clare Baldwin

SAN FRANCISCO, July 13 (Reuters) - U.S. semiconductor equipment maker Novellus Systems Inc (NVLS.O) posted disappointing margins and a wider than expected loss, but a robust forecast helped limit share losses in late trade.

Many investors had bet on a gradual recovery in the chip sector and a bounce in profits for players such as Novellus. Analysts had hoped for Novellus, which competes with larger rival Applied Materials Inc (AMAT.O), to report fatter margins in line with cost-cutting and a market recovery.

"The margin actually came in a little weaker than what people were thinking," said Needham & Company analyst Edwin Mok. "People were expecting the margin to expand sequentially from last quarter to this quarter but it did not."

Novellus Chief Executive Richard Hill said on a conference call he expected revenue of $150-180 million in the third quarter, down 30 to 42 percent from a year ago but sharply better than a 54 percent dive in second-quarter turnover to $119 million, year on year.

Novellus reported a net loss of 52 cents per diluted share in the quarter ended June 27. But excluding items such as a $15.9 million charge for workforce reductions and scaling back parts of its business, Novellus reported a loss of $39.3 million, or 41 cents a share. [ID:nWNAB6668]

Analysts on average had expected a loss of 38 cents a share, according to Reuters Estimates.

Hill told analysts he expected gross margins to improve to about 40 percent in the third quarter.

Excluding certain items, Novellus posted a gross margin of 32.4 percent, in line with the company's outlook. But on a GAAP-basis, Novellus reported second quarter gross margins of just 26 percent -- matching its first quarter result.

Shares of San Jose, California-based Novellus closed up 3.7 percent. They fell 3 percent in after-hours trade on Nasdaq, before rebounding to $18.35, 1.7 percent below their close.

Caris & Company analyst Benedict Pang had also foreseen more of an upside to Novellus' results.

"Expectations were clearly that they would be at the high end of guidance or even beat the guidance," he said. (Reporting by Clare Baldwin in San Francisco; Editing by Richard Chang and Anshuman Daga)