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Applied Materials Swing into Loss in Q2, But Outlook for Orders Improving (AMAT)

Semiconductor equipment manufacturing Company, Applied Materials Inc. (NASDAQ: AMAT) said late on Thursday that it swung into a loss in its fiscal second quarter as it took big one-time charges related to restructuring and a write-down while the top line was hurt due to weak demand for its products from the solar industry.

The Santa Clara, California-based Company, which builds equipment to make chips used in wide ranging industries, has seen its top line and bottom line reeling under pressure lately due to weakness in demand from flat panel liquid crystal displays (LCDs) and solar PV Cells markets. Besides, the semiconductor industry is also regarded as highly cyclical; not surprising the Company has been through boom-and-bust cycles before. However, the Company on Thursday said that orders have started to pick up, driven in part by increase in spending by built-to-order chip makers, referred to as foundries.

In the fiscal second quarter, orders rose 7% from the year-earlier quarter while display (LCDs) orders soared 41%, sequentially.

Commenting over the improvement in demand, Company’s Chief Executive, Mike Splinter said in a statement, “We are seeing increasing pull from some of our largest strategic customers for our key enabling technologies.”

For the fiscal second quarter ended April 28, the Company reported a loss of $129 million or 11 cents a share compared to a profit of $289 million or 22 cents a share. In the recently concluded quarter, the company took a onetime charge of $278 million, a write-down linked to worsening environment of the solar equipment. The Company also booked $10 million against restructuring expenses.

Stripping out onetime items, adjusted earnings stood at 16 cents a share down from 27 cents a share.

Sales during the quarter plunged 22% to $1.97 billion.

Earlier the Company projected earnings of 9 cents to 15 cents a share on revenue of about $1.81 billion to $1.97 billion.

Gross margin improved to 41% from 39.8%.

For the fiscal third quarter, the Company anticipates earnings to be in the range of 16 to 20 cents a share on revenue which is expected to slightly better than current quarter’s. Analysts surveyed by Thomson Reuters were expecting earnings of 19 cents a share on revenue of $2.12 billion.

 

 

 


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