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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (42602)	8/17/2005 10:03:39 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70347

Applied Materials profit falls Tuesday August 16, 9:01 pm ET By Eric Auchard SAN FRANCISCO (Reuters) - Applied Materials Inc. (NasdaqNM:AMAT - News), the world's largest maker of semiconductor tools, on Tuesday posted a 16 percent drop in profit but said orders are rising, potentially ending a year-long industry sales slump. ADVERTISEMENT Applied Materials shares were up 3.3 percent in after-hours trade to $17.75 from their regular session close of $17.17. Orders are set to rebound 5 percent to 10 percent in the fiscal fourth quarter ending in October and improve further in the quarter ending in January 2006, Chief Executive Michael Splinter said. "We will see how far it goes, but it is certainly a positive trend." Splinter told Reuters in a phone interview. Renewed order growth reflects underlying demand for computers, mobile phones and flat-panel televisions, he said. "Orders are headed up and I have to eat a little crow here," said Bank of America Securities analyst Mark Fitzgerald, Wall Street's most bearish analyst on chip equipment stocks. The analyst, who advises investors to sell shares of Applied, had predicted orders for the current fourth quarter would drop 10 percent instead of rising 5 percent to 10 percent as the company now predicts. MORE CUSTOMERS PLACING ORDERS After cutting spending for much of the past year, Applied Materials' foundry customers in Asia and in the memory chip market have begun investing again in new chip-making tools as plant capacity tightens, Splinter said. Foundries are contract chip-making plants that build semiconductors on behalf of electronics makers who don't own plants of their own or who lack sufficient factory capacity. "We are see an increase in demand and wafer-loading in our customer factories," he told Reuters in a telephone interview. Wafer-loading refers to how chip makers start making additional silicon wafers from which new semiconductors can be produced. "There is enough end-user demand that (plant) capacity is filling up," he said. Analysts say it remains too early to say whether a rebound is in store for the industry, which has suffered four quarters of falling orders after a banner 2004 year for tool sales. In the past, rebounds in the boom-to-bust-to-boom industry have led investors to feast on sustained cyclical recoveries that run for two and three years. But most analysts believe that growth cycles have shortened to just several quarters. Bears like Fitzgerald believe that the pickup in orders will be followed sometime in 2006 with a renewed downturn. FLOATING ALONG THE BOTTOM Net income for the company's third fiscal quarter ended July 31, fell to $370 million, or 23 cents per diluted share from $441 million, or 26 cents per share a year earlier. The latest quarter's results included a favorable tax adjustment of $132 million, or 8 cents per share, largely tied to the resolution of a multiyear tax examination, it said. Excluding the gain, earnings per share were 15 cents. On that basis, Wall Street was looking for an average profit of 14 cents per share, according to Reuters Estimates. Net sales tumbled 27 percent to $1.63 billion from $2.24 billion. Weak sales in Japan were only partly offset by a growing percentage of sales from other markets in Asia, North America and Europe. Analysts were looking for net sales, on average, of $1.65 billion, according to Reuters Estimates data. Forecasts ranged between $1.58 billion and $1.73 billion. New orders during the three months ended in July fell 5 percent to $1.47, compared with the quarter ended in April, and were down 40 percent from a year earlier. [Harry: It is still a mixed picture. Despite what AMAT is saying about strength in computers, cellphones and flat panels, DELL and GTWY both are reporting weaker guidance, PHTN suggest their is not strength in new flat panel start ups or addition to capacity and NOK was indicating some weakness. NOK weakness is partial due to share loss to MOT though. It is not the slam dunk the analysis would suggest in this morning's coverage.]