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Revenue Pull By Japanese Competitors Could Distort Market Sentiment For Applied Materials


  • North American and Japanese semiconductor equipment companies pull in revenues the last month of Q4 of each FY.
  • This pull-in of revenues by the Japanese companies is distorting and inflating QoQ revenues reported for the previous quarter ending March 31, 2018.
  • MoM revenue growth for Japanese equipment companies was 25% in March 2018 due to pull-in versus 0.4% for N. American companies with no pull-ins.
  • Applied Materials reports its next quarter earnings on May 17, one month later than North American and Japanese competitors.
  • The distorted revenues from the Japanese competitors could influence investor sentiment.

Semiconductor equipment suppliers typically pull in revenues in the last month of Q4 of their fiscal year, so their results look better to their investors. This can be achieved by expediting deliveries or designing payment terms to be made before the end of the period.

North American companies, whose fiscal year usually ends on December 31, pull in revenues December, the last month of Q4, as shown in Chart 1. This is for North American billings from 2015 to 2018.

Chart 1

Note that the last month of the year shows a sharp rise in revenue. The following several months are usually flat because revenue that would have normally been received in Q1 is pulled in to the last month of the current quarter.

Japanese companies are no exception, except that companies typically end their fiscal year at the end of March. As shown in Chart 2, the trend is the same - a dramatic rise in the last month of the fiscal year, corresponding to FY Q4.

Chart 2

How are Applied Materials Earnings Affected

North American companies are reporting financials for CY Q1 at the same time as Japanese companies are reporting financials for FY Q4. There is little impact on investor sentiment on stock valuations for North American because they are reporting at the same time as the Japanese.

However, Applied Materials (NASDAQ:AMAT) ends its quarter one month later, so instead of March 31, like most companies, it ends on April 30. Thus, the distorted revenue growth seen in Chart 2 is published in the media at least several weeks before AMAT reports. As a result, it could influence investor outlook prior to AMAT's earnings call.

Here's an example of what I'm writing about. Japan's Tokyo Electron (OTCPK:TOELY) reported earnings on April 25, 2018, which is about three

This article was written by

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Dr. Robert N. Castellano, is president of The Information Network www.theinformationnet.com. Most of the data, as well as tables and charts I use in my articles, come from my market research reports. If you need additional information about any article, please go to my website.

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I received a Ph.D. degree in chemistry from Oxford University (England) under Dr. John Goodenough, inventor of the lithium ion battery and 2019 Nobel Prize winner in Chemistry. I've had ten years experience in the field of wafer fabrication at AT&T Bell Laboratories and Stanford University.

I have been Editor-in-Chief of the peer-reviewed Journal of Active and Passive Electronic Devices since 2000. I authored the book "Technology Trends in VLSI Manufacturing" (Gordon and Breach), "Solar Panel Processing" (Old City Publishing), "Alternative Energy Technology" (Old City Publishing). Also in the solar area, I am CEO of SolarPA, which uses a proprietary nanomaterial to coat solar cells, increasing the efficiency by up to 10%. I recently published a fictional novel Blessed, available on Amazon and other sites.

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