Applied Materials (AMAT) is expected to report Q2 earnings after the market close on Thursday, May 17, with a conference call scheduled for 4:30 pm ET.
The consensus estimate is 24c for EPS and $2.40B for revenue, according to First Call. Applied Materials projects Q2 revenue to be up 5%-15% sequentially, with SSG including Varian increasing 15-25% sequentially, AGS to be up 5-10%, Display being flat to down 25% and EES to be down more than 40%. The non-GAAP EPS is expected to come in at 20c-28c a share. A few analysts expect a decent Q2 with revenue and earnings in line with consensus. They believe that pressure in both Display and Solar will be partially offset by growth in Silicon and a modest improvement in Service, helping results to match the guidance. Also, a few analysts expect revenue to come in modestly above the mid-point of guidance, consistent with its peers including Lam Research (LRCX), Novellus Systems (NVLS) and KLA-Tencor (KLAC). Some remain cautious about the company's efforts in the solar energy market since management has already missed several targets to bring its solar division to profitability.
Key Focus Points: 1) Update on the $30B-$35B 2012 WFE spending outlook and preliminary view of 2013 spending outlook given positive comments from Intel (INTC). Recent Taiwan Semiconductor (TSM) comments could prompt AMAT to tighten the range to $32-35B; 2) Progress of initiative to grow share within foundries from 20%-24% in 2012, led mostly by Varian acquisition plus increased investment in advanced transistors within foundries; 3) Update on expectations for the opex run rate going forward -- the current opex run rate is $555-$565M per quarter; 4) Progress on improving FPD breakeven from $450M as of last quarter to $400M; 5) Progress on improving EES breakeven from $800M to $500M -- by end of 2013 with $600M run-rate exiting 2012.