Applied Materialsreported lower third-quarter earnings of 35 cents a share as the world's top supplier of equipment used to make semiconductors faced tough conditions in the display industry while costs rose and interest income declined.
Shares of the company were down about 1.5 percent in after-market Nasdaq trading Tuesday.
Earnings of 35 cents a share exclude one-time items but include stock-based compensation. They exceeded a Thomson Financial consensus estimate of 32 cents a share.
A 14 percent drop in orders from the previous quarter was toward the upper end of the company's range of forecasts for the decline. But demand for memory chips helped the quarterly results, Applied said.
Net income for Applied's third fiscal quarter was $473.5 million, compared with $512 million a year earlier. Sales for the quarter rose 1 percent from the same period last year, coming in at $2.56 billion and topping forecasts of $2.532 billion.
When Applied last reported quarterly results, it sounded cautious notes on several business segments from contract chip makers to makers of flat-panel displays, and forecast a drop in orders.
However, Applied is now heading solidly into the back half of the year, a period that includes back-to-school and holiday sales. Applied, along with other chip equipment makers, has in recent quarters seen strong demand from memory chip makers.
"Memory demand drove opportunities for the semiconductor equipment industry and Applied," Chief Executive Mike Splinter said in a statement. "Conditions in the display industry remained challenging, as customers work to fully utilize existing capacity."
Splinter also said the company added three contracts for thin-film solar production lines to those already announced this year, reflecting the expanding market for the technology. The stock had been up 18 percent this year, as of Monday's close.