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Applied Materials slips on FQ3 miss, light guidance; foundries pare orders

  • Applied (AMAT) expects FQ4 revenue to be roughly flat Q/Q, below a consensus for 8% growth. EPS is expected to be in a range of $0.16-$0.20, below a $0.21 consensus.
  • Backlog was roughly flat Q/Q in FQ3 at $2.29B after rising 9% in FQ2. But orders -12% Q/Q to $2B vs. +7% in FQ2. Book-to-bill was at 1.01.
  • Chip equipment division orders -22% Q/Q to $1.2B vs. +14% in FQ2. Declining foundry orders (still 45% of total) offset higher memory/logic orders.
  • Display orders, depressed for a long time, had another strong quarter. They rose 31% Q/Q in FQ3 to $256M after growing 41% in FQ2, as LCD TV-related investments finally start rebounding.
  • Global Services orders +7%  to $517M vs. -12% in FQ2. Solar division orders plunged another 51% to a mere $19M, as panel manufacturers do their utmost to put a lid on industry capacity.
  • Gross margin was 42.9%, -40 bps Q/Q but +130 bps Y/Y. $50M was spent on buybacks. R&D spend rose Y/Y, but sales/marketing and G&A spend fell thanks to restructuring efforts.
  • AMAT -1.9% AH. FQ3 results, PR
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