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November 17, 2010, 6:18 PM EST
By Ian King and Joseph Galante
(Updates with comment from CFO Davis in fourth paragraph.)
Nov. 17 (Bloomberg) -- Applied Materials Inc., the world’s largest producer of chipmaking equipment, said profit more than tripled as semiconductor manufacturers ordered more machinery.
Fourth-quarter net income increased to $468 million, or 35 cents a share, from $137.9 million, or 10 cents, a year earlier, the Santa Clara, California-based company said today in a statement. Sales rose 89 percent to $2.89 billion. Analysts on average projected profit of 31 cents and sales of $2.6 billion, according to estimates compiled by Bloomberg.
Foundries, which make products on behalf of chipmakers, are ordering equipment to expand their output. Applied, whose leading position in the machinery market makes it a bellwether for demand in the chip industry, said new orders in the quarter ended Oct. 31 more than doubled to $3.03 billion. The company said consumer electronics demand is strong.
“We haven’t seen orders at this level for 10 years,” Chief Financial Officer George Davis said in an interview after the earnings were released. “We’re at a very strong point in the cycle.”
Applied was little changed at $12.34 in extended trading after dropping 8 cents to $12.38 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have fallen 11 percent this year.
“They’ve been pretty solid contributors to capital spending this year,” Patrick Ho, an analyst at Stifel Nicolaus & Co. in Dallas, said, referring to the foundries. He recommends buying Applied stock, and says he owns some shares. “It doesn’t look like it’s going to slow down dramatically.”
First-Quarter Forecast
The company said in July that it’s giving up on an attempt to break into a new part of the solar-panel equipment business and will stop selling its SunFab lines, which use so-called thin-film technology. Applied is cutting as many as 500 jobs globally as part of the shutdown.
Applied said first-quarter revenue will drop 8 percent to 15 percent from the fourth quarter. That indicates sales of about $2.45 billion to $2.66 billion, and compares with the $2.65 billion average of analysts’ estimates. Profit excluding some costs will be 30 cents to 34 cents a share, That compares with the 33-cent average of projections compiled by Bloomberg.
Under Chief Executive Officer Mike Splinter, Applied has sought to reduce its reliance on the chip-equipment business. It adapted some of its machinery to make semiconductors and flat- panel displays for use in the production of solar panels.
(Applied held a conference call for analysts at 4:30 p.m. New York time. Go to {LIVE } for a replay.)
--Editors: Lisa Wolfson, Tom Giles
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net; Joseph Galante in San Francisco at jgalante3@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net.
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(Updates with comment from CFO Davis in fourth paragraph.)
Nov. 17 (Bloomberg) -- Applied Materials Inc., the world’s largest producer of chipmaking equipment, said profit more than tripled as semiconductor manufacturers ordered more machinery.
Fourth-quarter net income increased to $468 million, or 35 cents a share, from $137.9 million, or 10 cents, a year earlier, the Santa Clara, California-based company said today in a statement. Sales rose 89 percent to $2.89 billion. Analysts on average projected profit of 31 cents and sales of $2.6 billion, according to estimates compiled by Bloomberg.
Foundries, which make products on behalf of chipmakers, are ordering equipment to expand their output. Applied, whose leading position in the machinery market makes it a bellwether for demand in the chip industry, said new orders in the quarter ended Oct. 31 more than doubled to $3.03 billion. The company said consumer electronics demand is strong.
“We haven’t seen orders at this level for 10 years,” Chief Financial Officer George Davis said in an interview after the earnings were released. “We’re at a very strong point in the cycle.”
Applied was little changed at $12.34 in extended trading after dropping 8 cents to $12.38 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have fallen 11 percent this year.
“They’ve been pretty solid contributors to capital spending this year,” Patrick Ho, an analyst at Stifel Nicolaus & Co. in Dallas, said, referring to the foundries. He recommends buying Applied stock, and says he owns some shares. “It doesn’t look like it’s going to slow down dramatically.”
First-Quarter Forecast
The company said in July that it’s giving up on an attempt to break into a new part of the solar-panel equipment business and will stop selling its SunFab lines, which use so-called thin-film technology. Applied is cutting as many as 500 jobs globally as part of the shutdown.
Applied said first-quarter revenue will drop 8 percent to 15 percent from the fourth quarter. That indicates sales of about $2.45 billion to $2.66 billion, and compares with the $2.65 billion average of analysts’ estimates. Profit excluding some costs will be 30 cents to 34 cents a share, That compares with the 33-cent average of projections compiled by Bloomberg.
Under Chief Executive Officer Mike Splinter, Applied has sought to reduce its reliance on the chip-equipment business. It adapted some of its machinery to make semiconductors and flat- panel displays for use in the production of solar panels.
(Applied held a conference call for analysts at 4:30 p.m. New York time. Go to {LIVE } for a replay.)
--Editors: Lisa Wolfson, Tom Giles
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net; Joseph Galante in San Francisco at jgalante3@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net.
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