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Applied Materials, Inc. Message Board

  • oliviah26 oliviah26 Feb 17, 2003 6:11 PM Flag


    Applied Materials (issue #277): A couple of weeks ago, the
    company confessed that business was getting worse and that
    it would fall short of its forecasts.

    Fast-forward two weeks ... and Applied Materials admits that it
    couldn't even hit that drastically reduced target, either.

    Applied Materials disappointed on BOTH the revenue and
    earnings side for the fourth quarter. It brought in $1.05 billion
    of sales, a staggering 27% decline from the third quarter.

    The company reported that it broke even for the fourth quarter
    on a "pro forma" basis -- which means if it bends the numbers
    and squints at them the right way, it looks like it broke even.
    Pro forma baloney aside, Applied Materials really lost
    $66 million or 4 cents a share.

    And things don't look like they'll improve anytime soon. After
    all, Applied Materials' amount of order backlogs fell from
    $3.19 billion last quarter to $3.05 billion this quarter. Why?
    Because customers are canceling orders.

    Meanwhile, gross profit margins dropped to 37% from nearly
    42% last quarter. This indicates that Applied Materials is
    cutting prices. It's a simple formula:

    Lower sales + lower profit margins = look out below!

    Also, Applied Materials will be shutting its production plants for
    two weeks this quarter. According to CEO James Morgan: "In
    the near term, we do not expect to see a significant upturn in
    capital spending."

    Despite this litany of doom, the stock is still trading at 89 times
    forward earnings. That's ridiculous! Business is indeed going
    to get worse -- and the stock of Applied Materials still has a
    long, long ways to fall. Stay short!

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