Earnings Preview: Applied Materials

Aug.15.12 | About: Applied Materials, (AMAT)

Applied Materials (NASDAQ:AMAT) is expected to report Q3 earnings after the market close on Wednesday, August 15, with a conference call scheduled for 4:30 pm ET.


The consensus estimate 22c for EPS and $2.32B for revenue, according to First Call. If the numbers come in as expected, it would mark the fourth straight quarter of year-to-year declines in EPS and sales. Wall Street doesn't see Applied Materials returning to growth until Q3 next year, by which time it would have posted seven straight quarters of year-over-year sales and EPS declines. Applied Materials lowered its outlook for Q3 and Q4 on July 10, citing weak demand in its semiconductor equipment business, particularly from foundry customers. Management sees Q3 adjusted EPS at the low end of its 21c-29c prior view, and Q3 sales at the low end of its previous flat-down 10% view vs. Q2.

Analyst Views

Stifel Nicolaus expects Applied Materials to generally meet its estimates of pro-forma EPS of 24c excluding options -- or 20c including -- and $2.4B in revenue, as the company has already reset expectations for the rest of the year. Near term, Stifel expects management to maintain a cautious take, similar to others in the industry. Stifel does not expect any major surprises in management's commentary regarding the near term environment -- nor any announcements on the long term plans on this call -- but they believe a shift is occurring within the company. In Stifel's view, this transformation will take some time, but the firm believes the company is getting the right people and strategy in place for a turnaround to occur. Back on July 10, management cuts FY12 adjusted EPS guidance below prior view of 85c-95c The company will provide a new target range on the Q3 call, however it expects that the demand changes could have a 15c-20c impact on FY12 non-GAAP EPS results.