from briefing.
APPLIED MATERIALS INC. (AMAT) 39 3/8 +1 7/16. Shares of semiconductor wafer equipment manufacturer are performing rather
well today, considering that the outlook remains rather cloudy. While the company managed to match Wall Street expectations with
its Q2 results last night, it cautioned that circumstances in Asia are not particularly good and does not expect any major turn
around in capital spending conditions anytime soon as the semiconductor sector continues to be hampered by an oversupply in the
DRAM market. Revenues in the period rose 31% from a year-ago to $1.176 billion, but fell 10% sequentially. Likewise, gross
margins from a year-ago improved to 47.1% from 46%, but fell sequentially from Q1 level of 48.1% of total sales. The numbers are
certainly in keeping with the turmoil in the semiconductor sector and the best one could have hoped for considering the reduced
spending schedules for the sector. And while the outlook for a continuation of the spending trend is not too surprising, what has helped
the stock today is the fact that Wall Street has remained supportive. For the most, Wall Street continues to view the stock favorably,
shaving earnings estimates for the next couple of fiscal years, in keeping with the guidance the company provided, yet maintaining
positive views about the stock going forward. In fact, most Wall Street firms are positive that a turnaround in the semiconductor sector
will occur sooner rather than later and are continuing to recommend the stock. Only BA Robertson Stephens has downgraded AMAT,
and they went from a "strong buy" to a "buy." Considering the slowing business activity in the US and Taiwanese markets, the way Wall
Street has lined up behind the stock must be considered a major win for the stock. |
