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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (9833)	5/18/2004 8:01:59 PM
From: Proud_Infidel	Respond to of 25522

Margins key for Applied Materials By Chris Kraeuter, CBS.MarketWatch.com Last Update: 7:49 PM ET May 18, 2004 SAN FRANCISCO (CBS.MW) - Applied Materials boosted its gross margins sequentially 3 percentage points to 46 percent during its second quarter, reaping additional benefits from cost cuts implemented in 2003. "We were very good at leveraging our infrastructure to put money on the bottom line," said Chief Executive Mike Splinter. "We think it will continue." He declined to be specific about how far margins can expand, but he said productivity is the key to growing the company's profitability. Santa Clara, Calif.-based Applied Materials (AMAT: news, chart, profile) makes equipment used to manufacture semiconductors. "You reach some economy of scale at some point, but we're really confident that we can still improve productivity in the quarters ahead," Splinter said. Applied Materials reported sequential revenue growth of $450 million to $2 billion for its second fiscal quarter, which ended May 2. Of that $450 million difference, Splinter said roughly $225 million of that went straight to Applied Materials' profit of $373.3 million. See full story about the company's results. "As revenue grows, I think they will still get incremental flow-through to their bottom line," said analyst Patrick Ho with Moors & Cabot, who had predicted gross margins of 45.7 percent for the second quarter and margins as high as 51.8 percent for the fourth quarter of 2005. Applied Materials' margins have been increasing for the past three quarters when they bottomed out at 31.7 percent in the third quarter. During that period, the company took a $164 million charge to reduce headcount and shutter some facilities.