Weaker Quarter Coming Says Applied Materials (AMAT)

Applied Materials Inc. (NASDAQ: AMAT) reported adjusted third fiscal quarter EPS of $0.24 and $2.34 billion in revenues after markets closed today. In the same period a year ago, the semiconductor manufacturing equipment maker reported EPS of $0.35 on revenue of $2.79 billion. Second-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.22 and $2.32 billion in revenue.

The company’s chairman/CEO said:

We delivered solid financial performance in line with our outlook despite challenging industry conditions in semiconductor, display and solar. Economic uncertainty is weighing on top of a seasonal pullback to produce weaker near-term demand.

Applied Materials posted GAAP EPS of $0.17, and the adjusted results eliminated the effects of “certain discrete tax items, restructuring and asset impairment charges and any associated adjustments related to restructuring actions, certain acquisition-related costs, investment impairments, and gain or loss on sale of facilities.”

For the current quarter, the company guided revenues down -10% to -25% sequentially, in a range of $1.76-$2.1 billion. The consensus estimate had been $1.94 billion. Adjusted EPS for the fourth quarter was forecast in the range from flat to up $0.06, well below the current estimate of $0.12.

The company continues to get hit with restructuring charges from its acquisition of Varian, and sales of equipment to solar wafer and PV makers are falling off the table. Orders in the energy and environmental solutions division were down -44% to $35 million and the segment had an adjusted operating loss of -$64 million (-$102 unadjusted).

Applied Materials’ shares unchanged in after-hours trading at $11.80. The current 52-week range is $9.70-$13.94. Thomson Reuters had a consensus analyst price target of $13.18 before today’s results were announced.

Paul Ausick