From Captain Morgan: "Applied's Morgan said it is hard for his company to be anything other positive right now. "As we talk to our customers, and as you look around the world, there is a shortage of parts across the board," Morgan said. "It's hard for us to be negative."
<<
KRTBN KNIGHT-RIDDER TRIBUNE BUSINESS NEWS: SAN JOSE MERCURY NEWS - CALIFORNIA: SEMICONDUCTOR EQUIPMENT MAKER REPORTS STRONG EARNINGS
81% match; San Jose Mercury News - California - KRTBN ; 10-Aug-2000 12:00:00 am ; 608 words
BY THERESE POLETTI
Applied Materials Inc., the world's largest developer of the expensive equipment used to make semiconductors, reported slightly better-than-expected third-quarter earnings Wednesday, as chip makers continued to invest in new manufacturing plants all over the world.
Santa Clara-based Applied reported net income that almost tripled to $604 million, or 70 cents a diluted share, up from $256 million, or 31 cents a share, in the year-ago period. The year-ago quarter figure excludes a charge of $9.8 million for discontinuing a joint venture.
Applied's earnings were two cents above analysts' estimates. According to First Call/Thomson Financial, the consensus on Wall Street was for Applied to earn 68 cents a share.
Revenues for the quarter climbed 83 percent to $2.7 billion, up from $1.5 billion a year ago, and new orders soared to $3.3 billion in the third quarter.
Applied's earnings are closely watched on Wall Street as one of the key barometers of demand in the boom-and-bust semiconductor industry. In recent weeks, there has been recurring talk on Wall Street of possible signs of the inevitable downturn, especially after some cell-phone makers recently scaled back their estimates for the phone handset market. These fears were heightened last week after a Cisco Systems Inc. executive was quoted saying his company is seeing a big improvement in supply of flash memory chips, which have been in very tight supply.
In a conference call with analysts, Applied executives were bullish about the fourth quarter and next year and even predicted a shortage later this year in dynamic random access memory chips (DRAMs), the most common memory chip in personal computers. A memory chip shortage could lead to more business for Applied as DRAM makers expand their manufacturing capacity, something they have been slow to do so far.
"This has been a great year, and next year has the potential to be even better," said Jim Morgan, chairman and chief executive of Applied. "We expect to experience continued strong growth through next year. We anticipate 2001 will be another strong year for the semiconductor industry."
"What was important was their outlook," said Min Pang, an analyst at SG Cowen & Co, after Applied's conference call. "I expected them to temper their view for the next quarter and say January 2001 would be a blockbuster, but they came out with all guns firing. They did paint an extremely positive picture."
Applied said that its new orders grew in North America at a pace of 30 percent, Japan grew 24 percent, Taiwan grew 15 percent, Europe was up 15 percent, Southeast Asia and China were up 9 percent and Korea was up 7 percent.
The company also said that while it received orders for its new so-called 300-millimeter equipment, it did not yet book any revenues for the products because it is working with its customers to make sure the products meet certain criteria before they book revenues. Last month, Applied launched a suite of 22 products that will handle 80 percent of this new manufacturing process, which will use 12-inch size silicon wafers, instead of 8-inch wafers, letting chip makers get at least 2.5 times more silicon chips per wafer.
Still, analysts said they did not believe Applied's quarter was good enough to spark a major rally in the downtrodden semiconductor and semiconductor equipment stocks.
"The quarter was good enough to give stabilization to the stocks, but I'm not sure if it was strong enough to give a strong rallying point," said Mike O'Brien, an analyst at Wit Soundview. "Until you get the wireless overhang behind you, and until you see the DRAM shortages come into play, you are probably not going to go back aggressively into the group. I don't think the cycle is over but you will have a couple more months of choppiness."
Shares of Applied traded up $1.56 to $72.12 in trading Wednesday, down from a 52-week high of $115. The company released its earnings after the close of the market.
Applied's Morgan said it is hard for his company to be anything other positive right now. "As we talk to our customers, and as you look around the world, there is a shortage of parts across the board," Morgan said. "It's hard for us to be negative." |
