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Applied Materials Profit Forecast Tops Estimates

Thursday, 16 February 2012 04:41 PM

Applied Materials Inc., the largest producer of chipmaking equipment, predicted higher second-quarter profit than analysts had estimated, signaling that semiconductor makers are pulling out of a spending slump.

Excluding certain costs, profit will be 20 cents to 28 cents in the period, the Santa Clara, California-based company said Thursday in a statement. That compares with an average analyst estimate of 16 cents, according to a Bloomberg survey.

Some of Applied’s larger customers, such as Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., are stepping up spending, according to Patrick Ho, an analyst at Stifel Nicolaus & Co. in Dallas. That’s helping make up for a slump in orders for equipment that makes flat-panel displays and solar panels, he said.

“TSMC and even Samsung are boosting orders,” Ho said. He recommends buying Applied stock, which he owns himself. “They should benefit from that,” Ho said.

Applied Materials shares rose 2.4 percent to $13.21 at the close in New York. The stock has gained 23 percent this year.

Investors and analysts track semiconductor-equipment orders as a harbinger of demand for electronics. Chipmakers such as Intel Corp. and Samsung vary spending on new equipment and plants based on their predictions for demand as much as two years in advance. Their factories can cost more than $3 billion to build and run 24 hours a day, which makes the companies careful with equipment purchases.

Applied’s Chief Executive Officer Mike Splinter said in November that orders for chip machinery were bottoming out and that some customers were poised to resume upgrading factories.

First-quarter net income fell to $117 million, or 9 cents a share, from $506 million, or 38 cents, a year earlier. Revenue fell 19 percent to $2.19 billion. Excluding certain costs, profit was 18 cents a share in the period, which ended Jan. 29. Analysts on average had estimated profit of 12 cents and sales of $1.97 billion.

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Thursday, 16 February 2012 04:41 PM
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