UPDATE 2-Novellus raises Q4 outlook as chip sector recovers
* Q4 outlook raised with PC demand returning
* Q3 loss less than expected
* Recovery hopes persist (Adds details on Q4 forecasts, details on peers)
LOS ANGELES, Oct 21 (Reuters) - Novellus Systems Inc (NVLS.O) raised its revenue and profit forecasts for the fourth-quarter on Wednesday, lending weight to a perception that demand in the battered semiconductor industry is recovering.
Shares of the U.S. maker of chip-manufacturing tools rose briefly after the company hiked its expectations for fourth-quarter earnings, citing improved forecasts for PC sales and resilient demand for smartphones.
Executives said Novellus was now forecasting earnings, excluding exceptionals, of 20 cents to 40 cents a share on revenue of $215 million to $245 million in the final three months of 2009.
Novellus joined chip industry peers in signaling a bounceback after demand collapsed earlier in the year as corporations slashed spending. Intel (INTC.O) and Texas Instruments (TXN.N) earlier in October reported strong results and offered rosier forecasts, underscoring how demand was returning. [ID:nN1315624]
Novellus pointed to forecasts from Intel, the world's top chip maker, that demand for PCs would hold steady in 2009 and jump 10 percent in 2010.
"If Intel's forecast materializes ... double-digit PC unit growth is nothing but good for the equipment business," Chairman and Chief Executive Rick Hill told analysts on a conference call.
Novellus had earlier projected fourth-quarter earnings of 10 to 20 cents a share on revenue of $200 million to $230 million.
On Wednesday, it posted slightly stronger-than-expected third-quarter results. The chip gear maker, which in September had raised its estimates for the quarter, posted a third-quarter net loss of $4 million, or 4 cents a share.
Excluding items, the U.S. company lost 3 cents a share, compared with analysts' average forecast of a 4-cent loss, according to Thomson Reuters I/B/E/S.
Net revenue came to $176.9 million, surpassing analysts' forecasts of $172.4 million and close to the higher end of its own announced projections.
For the third quarter, Novellus had projected a 9-cent loss per share to break-even on revenue of $160 million to $180 million.
Shares of Novellus dropped 16 cents in after-hours trade, after closing at $21.61 on the Nasdaq. (Reporting by Edwin Chan; Editing by Richard Chang)
