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Applied Materials Gives Bullish Outlook on Chip Industry Uptick

Ian King

(Bloomberg) -- Applied Materials Inc. gave a bullish sales forecast for the current quarter suggesting its chipmaker customers have returned to spending more on their factories.

The Santa Clara, California-based company is the largest maker of machinery used in the manufacture of semiconductors, which are among the most important parts of the electronics supply chain. Its customers include Samsung Electronics Co., Intel Corp. and Taiwan Semiconductor Manufacturing Co. That makes Applied Materials’ results and forecasts important early indicators of future demand in the electronics industry.

Key Insights

Fiscal second-quarter sales will be $4.34 billion, plus or minus $200 million, Applied Materials said Wednesday in a statement. That compares with analysts’ average estimate of $4 billion, according to data compiled by Bloomberg.Adjusted earnings will be 98 cents a share to $1.10 a share in the period ending in April, the company said. Analysts projected 92 cents.“We believe we can deliver strong double-digit growth in our semiconductor business this year as our unique solutions accelerate our customers’ success in the AI-Big Data era,” Chief Executive Officer Gary Dickerson said in the statement.Chip-equipment makers often experience wild earnings swings. Machines cost tens of millions of dollars each. Delaying factory build outs is one of the fastest ways a chipmaker can preserve cash when they’re unsure of future demand.Net income was $892 million, or 96 cents a share, in the fiscal first quarter, compared with $771 million, or 80 cents a share, a year earlier.Revenue gained 11% to $4.16 billion in the period ended Jan. 26, making it the first quarter of year-over-year growth in five quarters. Analysts were looking for $4.11 billion.

Stock Reaction

Shares rose about 1% in extended trading after the announcement. The stock closed at $65.37 in New York and has increased 60% over the last 12 months.

More Information

For more details, click here.To see the statement, click here.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editors responsible for this story: Alistair Barr at abarr18@bloomberg.net, Andrew Pollack

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