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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Tony Viola who wrote (36464)	8/9/2000 6:48:51 PM
From: Mark Duper	Respond to of 70976

Applied Materials' Optimism Bodes Well for Techs By Jamie Paton TheStreet.com/NYTimes.com Staff reporter 8/9/00 6:36 PM ET Wednesday's big tech earnings event provided more grounds for optimism among tech investors. Chip-equipment maker Applied Materials (AMAT:Nasdaq - news) Wednesday afternoon said third-quarter earnings more than doubled from a year ago, edging past Wall Street estimates as sales continued to balloon. Perhaps even more important, the biggest maker of the gear used to produce semiconductors used its postearnings conference call to forecast strong earnings and sales growth in coming quarters, leading into next year. Tuesday evening had provided a similar boost for tech stocks, when networking giant Cisco (CSCO:Nasdaq - news) beat fourth-quarter earnings estimates as the Internet building boom accelerates growth. The tech-littered Nasdaq Composite Index opened strongly higher Wednesday morning, as Cisco led a number of other networking stocks to 5%-10% gains. But tech stocks eventually frittered away most of their gains and ended only fractionally higher. Still, strong reports from leaders such as Cisco and Applied Materials suggest that the so-called tech bellwethers remain healthy, an indication that should at the very least keep tech shares on solid ground for now. Better Than Estimates Excluding one-time items, Applied Materials' net income reached $604 million, or 70 cents a share, in the lastest third quarter, up from $256 million, or 31 cents a share a year ago. The consensus earnings estimate among analysts polled by First Call/Thomson Financial was 68 cents. Strong Performer Applied Materials still higher despite pullback Source: BigCharts Applied Materials, based in Santa Clara, Calif., recorded third-quarter sales of $2.7 billion, an 83% rise from the comparable quarter of last year and a 25% increase from the second fiscal quarter of this year. Applied Materials said demand for semiconductors is only likely to grow. "I see a decade of opportunity ahead," Chairman and Chief Executive James C. Morgan said in a conference call with analysts Wednesday. New orders, the company said, climbed 116% to $3.3 billion in the latest quarter, eclipsing the $3 billion mark for the first time it its history. North America accounted for about a third of the new orders, while orders from Japan made up about a quarter of total new orders. Shares of Applied Materials rose 1 9/16, or 2.2%, to 72 1/8 Wednesday ahead of the earnings announcement, and they climbed even higher in after-hours trading, hitting 73, according to Instinet. Strength in Orders Still, with tech stocks priced somewhat precariously and so much expectation riding on a strong number, there's some sense that Wednesday's trading, with its whimpering finish, could provide the blueprint for Thursday. "I think there's a sense of relief, but I don't think the results will be enough for a big rally for equipment gear," says Michael O'Brien, an analyst with Wit SoundView. "But business is still good. It's certainly a good quarter." Applied Materials officials said they expect to deliver earnings between 73 cents and 75 cents a share in the next quarter, on revenue of $2.8 billion to $2.9 billion. Applied Materials predicted a strong next quarter and following year amid renewed growth in Japan, a shortage of memory chips and a strong world economy. Applied Materials also forecast new orders would rise to $3.5 billion from this quarter's record level, leading to revenue gains in following quarters as well. The comments seem to suggest that the semiconductor industry, like Cisco's networking sectory, remains healthy amid observers' concerns that an economic slowdown will weigh on earnings.