Applied Materials Sales Forecast Misses Projection

Applied Materials Inc., the world’s largest producer of chipmaking equipment, forecast fiscal first-quarter sales and profit that fell short of estimates, a sign that some customers are holding off on expansion plans.

Sales in the current period will decline as much as 15 percent from the prior quarter, the company said yesterday in a statement, a fifth straight year-over-year drop. That indicates revenue of $1.4 billion to $1.65 billion. Analysts on average estimated sales of $1.77 billion, according to data compiled by Bloomberg.

Applied Materials supplies machinery to the world’s biggest chipmakers -- Intel Corp., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. -- making orders an indicator of manufacturers’ confidence in demand. With excess supply, memory chip makers don’t yet see enough evidence to expand output, limiting the need for equipment.

“It’s pretty clear there’s not much of a rebound happening,” said Weston Twigg, an analyst at Pacific Crest Securities LLC who rates Applied Materials at sector perform. “So the guidance isn’t such a big negative surprise, given what peers have said.”

Excluding acquisition-related expenses, Applied Materials said it will break even or have a profit of as much as 6 cents in the first quarter, which ends in January. On that basis, it was estimated to have a profit of 9 cents a share, the average of analysts’ predictions.

Demand Rebound

The popularity of mobile devices will continue to drive spending in the industry, and demand will start to recover, according to Chief Executive Officer Mike Splinter.

“We see improving business conditions entering 2013, with orders projected to increase after bottoming in the fourth quarter,” Splinter said on a call yesterday with analysts. “We expect healthy investment by foundry customers in 2013, albeit at a lower level than 2012.”

Shares of Santa Clara, California-based Applied Materials rose less than 1 percent in after-hours trading yesterday. The stock fell 6 cents to $10.30 at the close in New York, and has declined 3.8 percent this year.

Applied Materials reported a fourth-quarter net loss of $515 million, or 42 cents a share, the first loss since the July quarter of 2009. The company posted net income of $456 million, or 34 cents a share, a year earlier.

Revenue in the period that ended Oct. 28 fell 25 percent to $1.65 billion. That compares with average analyst estimates for revenue of $1.58 billion.

In October, the company said it plans to eliminate 900 to 1,300 jobs, or 6 percent to 9 percent of worldwide workforce.

“Memory is still extremely weak and I don’t believe there can be a call for a turnaround yet,” said Ben Pang, a San Francisco-based analyst for Caris & Co.


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