Applied Materials Reports In-Line; Shares Fall on Guidance

Semiconductor equipment maker Applied Materials Inc. saw its Q4 profit drop 6% Y/Y on a 6% drop in revenue, and warned its next fiscal year will be "challenging." Net income was $421.8 million, good for EPS of $0.30, versus net income of $449 million a year ago. Revenue was $2.37 billion, down from $2.52 a year ago. Consensus analyst estimates were for EPS of $0.29 on sales of $2.38 billion. On the company's earnings conference call, CEO Mike splinter warned the first part of fiscal 2008 (already underway) would be "challenging, particularly on the silicon businesses. It's a dynamic environment and caution signals from customers reflect uncertainty. We expect semiconductor CapEx to be down roughly 5% to 15% during the year," (full transcript). Semiconductor makers have been trying to work off a supply glut that began in 2006 (full summary). Splinter further cautioned, "We expect investment in DRAM to pull back while Flash should continue to be strong. Investment via foundries was weak in 2007 and we expect that foundries will remain cautious until their demand picture gains clarity." The company expects its F1Q08 revenue to be down between 13% and 18%. Shares fell 4.3% in after-hours trading Wednesday on the company's soft outlook.

Sources: Press release, Wall Street Journal, Bloomberg, TheStreet.com, MarketWatch
Commentary: Semi Equipment Downturn Still Misunderstood • Applied Materials Finally Stops Calling the Bottom • Applied Materials Q3 Beats Street, But Gives Weak Guidance
Stocks/ETFs to watch: AMAT. Competitors: KLAC, LRCX, NVLS. ETFs: SMH, IGW, PSI, PBW
Earnings call transcript: Applied Materials F4Q07 (Qtr End 10/28/07)

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