Novellus Systems Inc. (NVLS) Chief Executive Richard Hill said the chip equipment market may have reached a bottom and provided second-quarter guidance above Wall Street estimates.

Novellus expects to post a second-quarter non-GAAP per share loss of 35 cents to 45 cents on revenue of $110 million to $125 million. Analysts, on average, were expecting a loss of 45 cents a share on revenue of $104.8 million, according to Thomson Reuters.

Novellus shares were recently up 4.3% to $18 in after-hours trading on the outlook and optimistic comments from Hill in a conference call to discuss first-quarter results.

"Electronics and semiconductor markets have stabilized in the last six weeks," Hill said. He cautioned however, that Novellus is still operating at "anemic levels."

Hill's comments mark a significant change in tone for the executive who only months earlier called the situation in the chip equipment market a "nuclear winter."

Novellus, which makes the tools used to produce semiconductors and other electronics products, has suffered along with its rivals as capital spending from chip makers has virtually ceased amid slumping demand and oversupply conditions in the memory chip markets.

The company reported first-quarter results Wednesday that were in line with earlier estimates for significant losses. In February, the company slashed its first-quarter outlook. Second-quarter gross margins are expected to be 31% plus or minus 2% and bookings will be up 20% to 50%.

Hill also said gross margins will continue to rise through 2009 with every dollar added in revenue.

Additionally, Hill questioned the need for consolidation in the industry at the moment.

"What value is there in combining with entities that may be too weak to survive?" Hill asked. "I wouldn't say we are going to rush out," into purchases or partnerships, he added.

-By Jerry A. DiColo; Dow Jones Newswires; 201-938-5670; jerry.dicolo@dowjones.com