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

To: Proud_Infidel who wrote (42139)	2/14/2001 9:19:56 AM
From: Jeffrey D	Read Replies (2) \| Respond to of 70976

Santa Clara, Calif., Semiconductor Equipment Maker Issues Grim Profit Forecast San Jose Mercury News - California - KRTBN; Feb 14, 2001 BY THERESE POLETTI SAN JOSE, Calif.--Applied Materials Inc., the world's largest maker of equipment used to make semiconductors, reported a 71 percent increase in fiscal first-quarter earnings, excluding one-time items. However, the Santa Clara company warned that orders were down sharply as demand declined rapidly in late January. Applied also gave a rather grim forecast for profits in the second quarter and confirmed that it is implementing a series of cost-cutting measures as it prepares to grapple with slowing semiconductor sales. Applied said that it is shutting down the company for five days during the quarter, cutting an unspecified number of temporary workers, deferring all merit raises, cutting pay by 10 percent for executives at the vice-president level and higher and cutting back on discretionary spending. "These measures will further improve our performance and productivity and let Applied emerge in a stronger position," said Joe Bronson, Applied's chief financial officer, in a conference call with analysts. Applied executives noted that in January, its chip-making customers seemed to slam on the brakes, as they evaluated what was going on in the U.S. economy. January also included an earlier-than-usual Chinese New Year holiday, when some Asian chip makers close for almost a week. For the first quarter, Applied reported net income, excluding one-time items, of $558 million, or 66 cents a diluted share. That was up 71 percent from $327 million, or 39 cents a diluted share, in the first fiscal quarter of 2000. Revenues were up 59 percent to $2.73 billion, up from $1.72 billion in the year-ago quarter. The company warned last month that analysts' profit expectations were too high. The company ended up beating the reduced consensus estimate of 63 cents a share, according to First Call/Thomson Financial. New orders, an indicator of future sales, dropped 33 percent to $2.43 billion, compared to $3.6 billion in the prior quarter and $2.45 billion in the year-ago quarter. "Orders were slightly worse than we thought," said Min Pang, an analyst with SG Cowen & Co. Bronson said that Applied's revenues in the second quarter will be in the range of $1.9 billion to $2 billion, with earnings per share of 32 to 37 cents a share. According to Chuck Hill, director of research at First Call, analysts had on average been expecting Applied to earn 49 cents a share, with individual estimates from 32 to 65 cents a share. Applied shares fell during regular Nasdaq trading Tuesday, closing at $41.25, down $2.75. After Applied released its financial report, shares fell even more, changing hands at around $40.62 in after-hours trading. Jim Morgan, Applied's chairman and chief executive, declined to speculate on how long the current slowdown will continue. But he noted that chip makers need to continue investing in new equipment over the next year to keep pace with some sweeping technology changes going on in the making of semiconductors, such as the use of copper, the move to smaller linewidths between transistors and the use of larger, 300-millimeter semiconductor wafers. "These customers have a very significant technological transformation taking place," Morgan said. "They are going to tighter geometries and using new materials to make these complex chip designs .They have the risk of getting behind technologically as some of them did in the last downturn. The technological shift is more severe in this downturn." Some analysts said they were surprised by Applied's current forecast for 10 percent growth in worldwide semiconductor sales even as chip companies cut capital spending by 20 percent. "We are figuring down 10 percent," said Sue Billat, a Robertson Stephens analyst. Billat added that she believes that the current downturn will be a "short, swift" one. "I think Applied's customers can and have slammed on the brakes on their business faster than ever before."