Thank you Brian. The following from Reuters which includes some of CEO Morgan's comments. Should be an interesting CNBC day tomorrow!
Jeff
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FOCUS - Applied Materials Q1 beats forecast
By Therese Poletti
SAN FRANCISCO, Feb 16 (Reuters) - Applied Materials Inc. <AMAT.O> on Tuesday reported lower first quarter earnings but surpassed Wall Street's highest expectations, predicting that the chip equipment industry is recovering from its long slump.
Applied Materials, the world's largest maker of semiconductor equipment, also surprised analysts with hefty new orders, which soared on a sequential basis to $1.03 billion in the quarter, from $684 million in the fourth quarter.
"The guidance they gave the Street was that they would report $600-$675 million in new orders but of course they blew right past that," said Min Pang, an SG Cowen & Co. analyst. "It's an indicator of the future business. It was a very strong statement that things are looking pretty good right now."
For the first quarter ended January 31, Applied reported first quarter net income of $52.9 million, or 14 cents per diluted share, down from $228.9 million, or 60 cents per share, a year ago, including non-operating income.
Setting aside the non-operating related income from a payment from ASM International BV on a note receivable, and one-time expenses, however, the company's operating profit fell to $42.5 million, or 11 cents per diluted share, from $197.8 million, or 52 cents per share, in last year's first quarter.
This compares with a consensus on Wall Street of 6 cents per share from continuing operations in the quarter, according to First Call Corp., which tracks analysts' estimates.
Revenues dropped 43 percent to $742 million, from $1.31 billion a year ago. New orders of $1.03 billion were down versus $1.29 billion in the year-ago period, but showed momentum at the end of the quarter, Applied said.
"Business was higher in all geographical regions," said Jim Morgan, chairman and chief executive of Applied. "We think they will continue to improve near-term...We should be able to grow as companies expand into new (manufacturing) technologies."
Applied, along with other chip equipment makers, has been hurt by the semiconductor industry slump of the last few years, which has been called the industry's longest-running slump.
"Last summer, I felt that business would pick up in the first quarter if the general economy held up and that has helped the high tech business around the world," Morgan said, adding that the recovery among Applied's semiconductor customers has been across the board, from the makers to memory chips, to microprocessors to logic chips.
Morgan said that Applied's customers are investing in new chip making technologies, such as .18 micron technology to create more chips per wafer with even finer linewidths.
About half of Applied's sales were for equipment developing chips using 0.25 micron technology and 25 percent buying 0.18 micron technology products.
Gross profit margins in the quarter also dropped to 43.2 percent of revenues, from 48.1 percent of revenues in the year-ago period. Margins were up slightly from fourth quarter gross margins of 42.3 percent of revenues.
In the quarter, Applied said that North American new orders were 38 percent of total orders, Europe was 17 percent, Japan 20 percent and Korea six percent. Taiwan made up 14 percent and Southeast Asia and China was five percent.
Backlog of orders at the end of the quarter increased to $1.15 billion, up from $917 million at the end of the fourth quarter.
Morgan also cited proved memory chip pricing, healthy demand for personal computers and a strong U.S. economy as helping cause the turnaround in the chip equipment business.
"If the macroeconomies stay healthy, then there is going to have to be some substantial investment in capacity and technology," said Mike O'Brien, a SoundView Financial Group analyst. O'Brien said he expects most analysts to raise their earnings estimates on Applied on Wednesday.
Morgan said he was comfortable with second quarter estimates ranging from 22 cents to 25 cents a share, up from the consensus estimate of 11 cents a share on First Call.
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