Applied Materials Falls After Reducing Fiscal 2012 Forecast

Applied Materials Cuts Yr Sales
The Applied Materials Inc. signage and logo is seen at the company's headquarters in Santa Clara. Photographer: David Paul Morris/Bloomberg

Applied Materials Inc. shares fell after the chipmaking-equipment provider sliced its fiscal 2012 sales and profit forecasts amid weakness in Europe, China, and the personal-computer market.

For the year that ends Oct. 28, 2012, net sales won’t reach the previous outlook of $9.1 billion to $9.5 billion, the Santa Clara, California-based company said today in statement. Per-share earnings excluding some items will be less than a previous projection of 85 cents a share to 95 cents, the company said.

Applied Materials Chief Executive Officer Mike Splinter, speaking at a conference today in San Francisco, said demand in Europe and China is ebbing. That echoed remarks from Advanced Micro Devices Inc., the second-biggest maker of processors for PCs, which yesterday blamed those regions for an unexpected drop in second-quarter sales.

“Both China and Europe are quite weak,” Splinter said. “Both markets are worse than they were at this time last year.”

Applied Materials said earlier that it’s seeing weaker demand from foundry customers, manufacturers that build chips for other companies. Investors and analysts track semiconductor-equipment orders as a harbinger of demand for the broader electronics industry.

The shares fell 2.7 percent to $10.71 at 4 p.m. in New York, leaving the stock little changed this year.

‘Global Slowdown’

A slowdown in business from Asia, as well as limited demand for devices made by Research In Motion Ltd. and Nokia Oyj, will lead other chipmakers and personal-computer suppliers to forecast earnings that fall short of expectations, said Jerome Ramel, an analyst with Exane BNP Paribas in London.

“There’s a global slowdown,” Ramel said in an interview today. “We should expect more warnings. All of the equipment guys will probably warn, and companies in the PC chain.”

For calendar 2012, spending on so-called wafer-fabrication equipment -- the machines used in chipmaking plants -- will be $30 billion to $33 billion, Applied Materials said, less than its prior projection of $32 billion to $35 billion.

The company also said financial results for the third quarter ending, which ends July 29, will be within in the range of its previous forecast, provided in May.

KLA-Tencor Corp., a maker of machinery used in the production of computer chips, plans to deliver a briefing for analysts later today.


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