Applied Materials Issues Upbeat Guidance as New Orders Surge--Update
May 19 2016 - 6:42PM
Dow Jones News
By Lisa Beilfuss
Applied Materials Inc. said orders hit a 15-year high in its
latest quarter, prompting the maker of semiconductor manufacturing
tools to project a major rebound in its business later this year as
those transactions are completed.
The company's second-quarter results topped expectations, as did
a projection for fiscal third-quarter results.
Applied attributed the gains primarily to spending on new
machines to produce memory chips and displays. Strong demand from
customers in China was cited as another factor.
The company's shares rose nearly 8% in after-hours trading.
The Santa Clara, Calif., company sells equipment to make chips
used in a wide range of products, including mobile phones. Its
machines are also used to make displays for TVs and other
products.
The company reported that second-quarter net income declined 12%
and revenue was flat. But orders surged 37% from a year earlier and
52% from the previous quarter, hitting $3.5 billion.
Gary Dickerson, Applied's chief executive, said one key driver
is a shift in the way companies plan to make the NAND flash memory
chips that are used in most mobile devices. The new approach,
called 3-D NAND, involves stacking layers of circuitry rather than
trying to make each transistor smaller. That requires new
production tools sold by Applied and others.
Another factor is the growing demand for displays built using
organic light-emitting diode, or OLED, technology, rather than
liquid-crystal displays.
In China, meanwhile, both domestic companies and those based
elsewhere are building new manufacturing capacity, Mr. Dickerson
said.
"These are big inflections, big waves that we think are
sustainable over the next few years," Mr. Dickerson said in an
interview.
Applied reported a profit of $320 million for the quarter ended
May 1, down from $364 million a year earlier. On a per-share basis,
earnings were flat at 29 cents because of a lower share count.
Revenue of $2.45 billion compared with $2.44 billion in the
year-earlier period.
Excluding restructuring charges, among other items, profit per
share came to 34 cents. On that basis, analysts had projected 32
cents on revenue of $2.43 billion.
For the current quarter, the company said it expects 46 cents to
50 cents in adjusted earnings per share, well above the 36 cents
analysts had anticipated. Sales will rise 14% from a year earlier,
the company said, translating to $2.84 billion. Analysts had
predicted $2.51 billion in sales for the July period.
Write to Don Clark at don.clark@wsj.com and Lisa Beilfuss at
lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
May 19, 2016 18:27 ET (22:27 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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