Applied Materials Expected to Report Higher 3rd-Quarter Profit
By Cesca Antonelli
Santa Clara, California, Aug. 7 (Bloomberg) -- Applied Materials Inc. will report Wednesday that fiscal third-quarter profit more than doubled, analysts said, and investors hope the results will quell concerns that chip demand is slowing.
The No. 1 semiconductor-equipment maker is expected to report that earnings in the quarter ended July 30 rose to 68 cents a share, the average estimate in a First Call/Thomson Financial survey. A year ago, Applied's profit was a split-adjusted 31 cents.
New orders at Applied, whose tools cover three-quarters of the chip-manufacturing process, represent one way to measure demand for semiconductors because customers buy more gear when the industry is hot. Investors said they'll pay especially close attention this quarter after Kulicke & Soffa Industries Inc.'s warning last week that some customers have delayed orders, sending stocks reeling.
``The Applied report could be the next major potential positive catalyst for the stocks,'' said John Spytek at Banc One Investment Advisors Corp., which owns Applied shares. ``They tend to do well and be conservative in their guidance, so it will depend on how the market construes the conservative guidance.''
Santa Clara, California-based Applied said in May that third- quarter profit would climb to 64 cents to 68 cents a share on sales of $2.6 billion to $2.7 billion. Orders will be more than $3 billion.
Analysts are more optimistic. Profit forecasts run as high as 74 cents, with top sales targets at $2.77 billion and orders expected to be as high as $3.5 billion. In the year-ago quarter, sales were $1.43 billion, while orders were $1.46 billion.
Behind the Numbers
Customers from Intel Corp. to Taiwan Semiconductor Manufacturing Co. are rushing chip-equipment companies to ship tools faster, trying to add capacity quickly and meet demand for the thumbnail-sized chips that run computers, electronic organizers and cell phones.
Equipment orders move in sharp cycles. Chipmakers tend to add large amounts of capacity at once -- buying mass quantities of tools to fill new plants and add new production lines -- and then find that they've got too much capacity and slow tool purchases.
Applied and other equipment stocks have been hit as analysts try to predict the end of the current boom. The Philadelphia Semiconductor Index has fallen 18 percent in the past month.
Applied shares rose 2 3/16 to 69 15/16 in late morning trading. They've lost 39 percent of their value since touching a high in April.
The company will release its results Wednesday after U.S. markets close. |
