Applied Materials Tops Forecasts as Chip Makers Boost Spending
Applied Materials posted a quarterly profit that beat expectations, as the top supplier of equipment for producing microchips benefited from higher capital spending by makers of memory chips.
The maker of equipment for manufacturing semiconductors said it earned 34 cents a share in the quarter. Applied had been seen reporting earnings of 28 cents a share, according to a consensus of equity analysts from Thomson Financial.
Revenue was $2.53 billion, up 13% from $2.25 billion a year earlier and ahead of the average analyst estimate of $2.35 billion.
"While the market for display remained soft, silicon and fab solutions exceeded expectations fueled by continued high levels of memory investment and momentum from market share gains," Chief Executive Mike Splinter said in a statement.
Applied said new orders in the quarter rose 6% on the year to $2.65 billion, while gross margin fell to 44.9%, from 46.5% a year earlier.
Applied Materials and other chip equipment suppliers such as Japan's Tokyo Electron have seen strong sales and profits in recent quarters on the back of booming orders from memory chip makers.
Based on Tuesday's closing prices, Applied Materials shares have risen nearly 6% in the past six months, compared with a gain of 8% for the S&P 500 Index.
Lower Sales Forecast
The company said in a conference call that it expects third-quarter revenue to be up or down 2% from the second quarter's $2.53billion. Applied expects orders to fall between 10 and 15%sequentially.
Analysts had been looking for Applied to show a profit of 30 cents a share in the third quarter on revenue of $2.44 billion, according to Thomson Financial.