SAN FRANCISCO Applied Materials Inc (AMAT.O), the No. 1 chip equipment maker, warned that profit in the current quarter would fall far short of Wall Street expectations due to the weakening global economy.
The company also said on Wednesday it would slash 1,800 jobs, or 12 percent of its workforce, to generate annual savings of $400 million. It said the cuts would begin in the current quarter and be completed by the end of fiscal 2009,
Shares of Applied, which initially rose 5 percent on the job cuts and stronger-than-expected quarterly results, erased gains and fell 1.5 percent on the weak outlook and a revenue warning from chip giant Intel Corp (INTC.O).
"The last six weeks of turmoil in the financial markets is unprecedented. The weakening global economy will have significant impact on all of Applied's businesses," Chief Executive Mike Splinter said on a conference call.
Applied forecast fiscal first-quarter earnings per share of 0 to 4 cents, with revenue falling 25 to 35 percent and orders down 30 percent from the fourth quarter.
Wall Street analysts were expecting first-quarter earnings, excluding special items, of 14 cents per share, according to Reuters Estimates.
Applied, like others in the chip-equipment industry, is suffering from a glut of chip manufacturing capacity in the face of a weak economy.
Its shares have fallen about 40 percent this year, and the company cut 1,000 jobs, or 7 percent of its workforce, in January.
In addition to the new job cuts, Applied also said it had put its stock buyback program temporarily on hold.
The company said earnings in its fiscal fourth-quarter ended October 26 fell to $231.1 million, or 17 cents a share, from $421.8 million, or 30 cents a share, in the year-ago period.
Excluding certain items, profit was 18 cents a share, beating the average analyst estimate of 14 cents a share, according to Reuters Estimates.
Revenue fell 13 percent to $2.04 billion, ahead of the average analyst forecast of $1.94 billion, according to Reuters Estimates.
New orders in the quarter came in at $2.21 billion, comparable with a year ago.
Applied has been pushing aggressively into the solar equipment business, which the company thinks could make up as much as 25 percent of its sales in 2009. Some analysts point to the solar shift as a potential bright spot.
"To date, the macroeconomic liquidity issues have had less immediate effect on our solar business. However, we expect a period of pullback and reassessment in early '09," Splinter said.
In June, Dutch semiconductor equipment maker ASM International (ASMI.AS) turned down Applied's $800 million takeover bid.
Shares of Santa Clara, California-based Applied fell to $9.80 in after-hours trading, after closing down 6.6 percent at $9.95 on Nasdaq.
(Reporting by Gabriel Madway in San Francisco and Tiffany Wu in New York, editing by Richard Chang)