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Applied Materials Results Top Forecasts
By Duncan Martell
PALO ALTO, Calif. (Reuters) - Applied Materials Inc. (Nasdaq:AMAT - news) posted a $186.7 million quarterly loss after charges, but operating profit sailed past Wall Street forecasts as the world's largest chip-equipment maker continued to cut costs.
Excluding charges, Applied said its earnings fell to $26.4 million, or 7 cents a share, for the fiscal fourth quarter ended Oct. 25, from $187.3 million, or 49 cents a share, a year ago. The results topped analyst expectations of 2 cents a share, according to research firm First Call Corp.
''What we're seeing is a clear indication that business has turned and I think we're going to have a slow, selected recovery that will be led by companies with advanced technology and Applied fits that bill,'' said Sue Billat, an analyst at BancBoston Robertson Stephens.
The net loss, equal to 51 cents a share, compared with year-ago net income of $180.1 million, or 47 cents a share. The net loss came after a restructuring charge of $170 million before taxes, or 44 cents a share after-tax. Revenues fell 47 percent to $673 million from $1.28 billion.
Despite the drop in revenues, analysts said they were pleased with the performance and that business was on an upturn as demand picked up with chipmakers needing new equipment to produce new generations of semiconductors.
''Revenues were ahead of my expectations,'' Billat said. ''This is, across the board, more positive than I expected.''
The semiconductor industry has been mired in its worst slump in a decade as global economic uncertainty and overcapacity of certain types of computer chips has prompted chip makers to pare back on purchases of multimillion-dollar equipment that Applied and its competitors produce.
Applied, which in August said it would cut 15 percent of its work force, or 2,000 jobs, continued to pare expenses.
Santa Clara, Calif.-based Applied said its gross margin, or the percentage of revenue remaining after subtracting product costs, was 42.3 percent, down from 44.6 percent in the third quarter and 48.1 percent in last year's fiscal fourth quarter.
Applied said, however, it was too soon to call an end to a slump in the global chip industry.
''Despite some recent favorable developments in the world economy and semiconductor industry, the outlook for our business is uncertain,'' Jim Morgan, the company's chairman and chief executive, said in a statement.
Applied stock rose $1.06 to $37.375 on Nasdaq. The company released results after the close of U.S. trading. The shares gained 12.5 cents in after-hours trading following the earnings report.
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