Novellus Raises Guidance

Novellus capped a strong day for stocks Monday by raising guidance after hours.

Novellus said it expects December quarter earnings of 6 cents a share, a penny ahead of analyst estimates and at the top end of the company’s previous guidance range. Revenues of $220 million would exceed analyst estimates of $217 million.

NVLS rose about 1% after hours on the news, and Semtech also gained in the after market after beating estimates and raising guidance.

The chip sector was the subject of a bull-bear debate during the day between Salomon Smith Barney and SG Cowen.

SSB cut its weighting on the chip and chip equipment groups to Market Weight from Overweight, saying its proprietary indicator on the sector is urging caution. As new production capacity comes on line, chip pricing may falter, and valuation may become a concern, SSB said.

SG Cowen said a cyclical recovery is underway in the sector, and said its view is supported by the recent EBN Semiconductor Purchasing Survey.

SG Cowen clearly had investors’ ears, as stocks rocketed higher on the day.

The Nasdaq soared 53 to 1947, the S&P 500 surged 16 to 1052, and the Dow rose 119 to 9747. Volume rose to 1.3 billion shares on the NYSE, and 1.8 billion on the Nasdaq. Advancers led 24-8 on the NYSE, and 23-9 on the Nasdaq. Upside volume was 85% on the NYSE, and 82% on the Nasdaq. New highs-new lows were 240-9 on the NYSE, and 249-20 on the Nasdaq.

Sohu surged 10% on rumors that it could be acquired by eBay .

Yahoo jumped 6% on reports of strong ad sales.

PeopleSoft gained 5% as Oracle restated its interest.

Microsoft rose 2% on another settlement.

SCO Group jumped 13% on a profile in Barron’s.

AT&T slipped despite a big win.

Tech Data lost 2% on a downgrade ahead of earnings tomorrow night.

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