From briefing.com:
Applied Materials (AMAT) 84 5/8 closed: After the close yesterday, Applied Materials announced its second fiscal quarter earnings
results and they were solid. Unfortunately, it looks as if the market doesn't think the results were solid enough as AMAT's second quarter
profit of $0.55 per diluted share was in line with consensus estimates, but five cents shy of that pernicious whisper number. As a result,
shares of AMAT are indicated to open approximately 4 points lower, compounding the misery for shareholders this week who have seen
their stock plunge roughly 20% since last Friday as this "born-again" market-- the one suddenly religious about valuations-- seemingly wants
little to do with the technology sector and its big-cap leaders. That was quite clear yesterday when Cisco (CSCO) traded down after a
stellar earnings report of its own. In any event, here are some of the items from AMAT's earnings report that have the market "concerned":
net income of $454 million was up 224% year-over-year and 38% sequentially; sales of $2.19 billion rose 87% year-over-year and 27%
sequentially; record new orders of $2.93 billion climbed 101% year-over-year and 19% sequentially; record backlog at the end of the
second fiscal quarter was $3.18 billion versus $2.46 billion at the end of the first fiscal quarter; gross margins were 50.1%, up from 46.3% in
the year-ago period and 49.8% in the first fiscal quarter; and shame on Applied Materials for saying it expects fiscal third quarter earnings to
come in $0.02-$0.06 ahead of the current estimate of $0.62. Oh yeah, Applied Materials also made the mistake of saying it believes orders
will remain robust for the remainder of the fiscal year. Now, if you'll allow me to take my tongue out of my cheek, the real concern for the
market is that AMAT perhaps already has all of that good news priced in; and that's a fair reservation considering that AMAT is up roughly
200% from where it traded at this time last year as word quickly spread the semiconductor industry was enjoying one of its strongest cyclical
upturns in some time. As we have noted on this page before (in fact, earlier this week), Applied Materials' CEO, James Morgan, doesn't
believe that upturn has peaked just yet either as he expects two more big waves of capital spending on the part of chip makers in 2001 and
2002 as they position themselves to produce chips with copper circuits and chips out of 300 millimeter silicon wafers. You can bet Applied
Materials will benefit from that technology transition which is why analysts continue to raise earnings estimates and why we don't believe the
best of times are behind this stock just yet either.-- Patrick J.O'Hare, Briefing.com |
