Lower Revenue Doesn’t Dampen Applied Materials Sentiment

Andrew Klips  |

Applied Materials Inc. (AMAT), the biggest chipmaker equipment producer in the world, delivered its financial report from the fiscal first quarter of 2013 after Wednesday’s closing bell, topping analyst expectations, although profit fell dropped substantial compared to the first quarter of fiscal 2012.

Applied generated net sales of $1.57 billion in the latest quarter, down by 28 percent from $2.19 billion in the year prior quarter. Non-GAAP net income was $69 million, or 6 cents per share, or 71 percent lower than last year’s quarter of $240 million, or 18 cents per share. The 6 cents EPS hit the high end of corporate guidance.

Analysts were expecting earnings of 6 cents per share on $1.55 billion in revenue.

"We executed well through the bottom of this industry investment cycle and, with our semiconductor orders up over 80 percent from the previous quarter, we are optimistic about the potential of our markets this year," said Mike Splinter, chairman and chief executive officer of Applied.

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Splinter was referencing company’s Silicon Systems Group, for which orders were $1.36 billion, an 84 percent increase versus the year earlier quarter as demand increased for foundry and memory. Those gains were pared by lower orders in logic.

During the quarter, the company’s backlog rose by 31 percent over the fourth quarter of fiscal 2012 to $2.11 billion, including $40 million in negative adjustments.

Applied paid $108 million in cash dividends during the quarter and spent another $48 million re-buying 4 million shares of its stock, ending the quarter with cash and equivalents of $2.82 billion.

Looking ahead, Applied said it expects fiscal second quarter net sales to increase 15 to 25 percent from the first quarter. Extrapolating from this quarter’s financials, that puts revenue between $1.73 billion to $1.96 billion. Non-GAAP EPS is projected to be in the range of 9 cents to 15 cents. Analysts were anticipating earning of 10 cents per share on revenue of $1.79 billion.

Shares of AMAT have been on a nearly straight upward march for the past three months, rising from around $10 per share to Wednesday’s closing price of $13.77. Extended-hours trading following the earnings report has continued the upward trek with shares surpassing $14 per share for the first time since May 2011.

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