Applied Materials profit tops Street forecasts

SAN FRANCISCO Tue Feb 12, 2008 7:32pm EST

Applied Materials Chief Executive Michael Splinter speaks at a news briefing in Washington, DC February 6, 2008. Applied Materials Inc's quarterly profit topped analysts estimates, helped by good flat-panel display demand, even as revenue declined 8 percent amid a slump in semiconductor equipment manufacturing. REUTERS/Joshua Roberts

Applied Materials Chief Executive Michael Splinter speaks at a news briefing in Washington, DC February 6, 2008. Applied Materials Inc's quarterly profit topped analysts estimates, helped by good flat-panel display demand, even as revenue declined 8 percent amid a slump in semiconductor equipment manufacturing.

Credit: Reuters/Joshua Roberts

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SAN FRANCISCO (Reuters) - Applied Materials Inc's (AMAT.O) quarterly profit topped analysts estimates, helped by good flat-panel display demand, even as revenue declined 8 percent amid a slump in semiconductor equipment manufacturing.

Shares of the company, the biggest producer of chipmaking equipment, climbed more than 4 percent.

In a statement, Chief Executive Mike Splinter noted strength in new orders paced by demand for its display products and orders for its first SunFab Thin Film Line, used in the manufacture of solar panels.

Net income for its first fiscal quarter declined to $262.4 million, or 19 cents per share, from $403.5 million, or 29 cents per share, a year ago. Revenue fell to $2.09 billion from $2.28 billion.

Earnings excluding stock-based compensation expenses and other charges were 23 cents per share, beating the average analyst forecast of 20 cents, according to Reuters Estimates. Analysts had expected revenue of $2.08 billion, on average.

Chief Financial Officer George Davis said on a conference call on Tuesday he expects second-quarter earnings per share of 18 cents to 22 cents. He said revenue should be flat to up 5 percent in the second quarter versus the first period.

"It's really display this quarter that had record equipment orders by a large margin," Davis said by telephone. "We're seeing LCD customers pull in their capacity into the first half of the year in terms of orders."

Analysts expect a second-quarter profit of 22 cents per share, on average, on revenue of $2.07 billion.

Orders in the second quarter will be down 5 percent to up 5 percent when compared with the first quarter, Applied said.

"This is coming off very strong order performance in Q1 and reflects expected strength in solar and display," Davis said on the call, referring to any upside surprise in order growth.

Orders in the first quarter were $2.5 billion, a 2 percent decrease from the year-ago period, but a 13 percent rise from the preceding quarter.

Taiwan represented 32 percent of orders, North America 20 percent, Korea 14 percent, Japan 12 percent, Southeast Asia and China 11 percent, and Europe 11 percent.

Applied, by far the biggest in the chip-equipment industry, competes against KLA-Tencor Corp (KLAC.O), Lam Research Corp (LRCX.O) and Tokyo Electron (8035.T), among others.

Santa Clara, California-based Applied's backlog at the end of the first quarter was $4.10 billion, up from $3.65 billion at the end of the preceding quarter.

Splinter has said he expects fiscal 2008 revenue to be little changed to slightly down, despite a forecast for capital spending in the chip industry to fall 5 percent to 15 percent this year.

"It's still looking that way," Splinter said on the call, referring to the company's prior forecast for chip equipment spending in 2008. He added that spending on DRAM memory-chip making equipment should decline about 30 percent, partially offset by spending on tools used to make flash memory chips.

Shares of Applied are up less than 1 percent so far this year. In the past 12 months, the stock has declined about 2 percent, compared with a 25 percent decline in the Philadelphia Semiconductor Index.

Shares of Applied fell 36 cents, or 2 percent, to close at $18.07. In extended trade, they rose 4.5 percent to $18.89.

(Editing by Braden Reddall)

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