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Company: Novellus Systems (NVLS)
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  NVLS's balance sheet has some strength to it

For The third quarter, the average earnings estimate of analysts that follow NVLS is presently in the range of $0.04 per share. On an annual basis, NVLS is expected to earn around $0.33 per share this year (2008 average estimate of 20 analysts) although this number has been reduced lately from a target of $0.46 per share ninety days ago. Next year's estimates (2009's) have also been cut from a level of nearly $1.19 per share to a standing $0.92 average expectation now. Those are pretty serious cuts, but the company's relative valuation to '09 earnings seems compelling at this point.

NVLS's balance sheet has some strength to it, with a cash pile of $428 million on hand at present. That is offset by only $154 million in long term debts. In the space of chip equipment makers, NVLS's $2.2 billion market cap is more or less "tiny" - the big brother in the sector is Applied Materials (AMAT) which tips the scales at $24.5 billion presently. AMAT trades at similar valuation levels with NVLS, and has $2.3 billion in cash on its balance sheets, so there may be a potential for industry consolidation here. That is a little beyond the scope of this report, but it's been highlighted here just for relative valuation appraisal purposes.

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