UPDATE 2-Applied Materials says smartphone-chip demand to aid revenue

Thu May 16, 2013 5:31pm EDT

By Noel Randewich

SAN FRANCISCO May 16 (Reuters) - Applied Materials , a maker of equipment used to manufacture chips, said on Thursday that demand for smartphone chips will help increase its revenues slightly in the current quarter and offset slowing demand from manufacturers hurt by slumping PC sales.

Contract manufacturers and companies making NAND flash memory chips are getting a lift from the proliferation of mobile devices and are driving demand for new equipment, Applied Materials executives told analysts on a conference call.

"The mobility trend remains the biggest factor influencing industry growth," Chief Executive Mike Splinter said.

"Demand for the advanced application and baseband processors used in smart phones and tablets is fueling investment by foundries as they had capacity at 28 nanometers and begin 20-nanometer pilot production," he added.

Applied Materials also provides manufacturing equipment and services for flat panel displays, solar photovoltaic and related industries.

The company said revenue for its fiscal second quarter, ended April 28, was $1.97 billion, down from $2.54 billion in the year-ago period.

The Santa Clara, California, company also said it expects current quarter revenue to be up slightly from the previous quarter.

Analysts had expected second-quarter revenue of $1.909 billion and third-quarter revenue of $2.120 billion, according to Thomson Reuters I/B/E/S.

In the second quarter, Applied Materials had a net loss of $129 million, or 11 cents a share, compared with net income of $289 million, or 22 cents a share, a year earlier.

Excluding items, the company earned 16 cents a share in the second quarter, compared with the 13 cents expected on average by analysts. It forecast adjusted EPS for the current quarter of 16 cents to 20 cents.

Shares of Applied Materials were flat in extended trade after closing down 0.95 percent at $14.66.

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