Barron's coverage of AMAT earnings is not especially flattering for AMAT or the sector...
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If you were expecting Applied Materials, which reported earnings last week, to provide a hint of when the semiconductor equipment sector might start to recover, you were no doubt disappointed. Applied said new orders in its fiscal third quarter, ended July 26, fell to $608 million, from $1.03 billion in the second quarter, and $1.24 billion a year earlier. In a statement, James Morgan, the company's CEO, said he couldn't predict how long the current downtrend will last, and that Applied was "assessing the appropriate level of infrastructure necessary to support a lower business volume."
Carl Johnson, editor of Infrastructure, a newsletter that tracks semiconductor equipment stocks, noted in a recent issue that Applied's fourth quarter will likely be about breakeven, followed by two or three more "dismal" quarters. Johnson also thinks Applied will soon make deep job cuts, trimming as many as 3,000 of its current 14,000 employees. In short, it looks a little early to bottom-fish the semiconductor equipment stocks. Applied Materials last week fell 4, to 31 1/8 .
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