May 17, 2018 / 8:15 PM / 8 days ago

Applied Materials sees revenue, semiconductor sales below estimates

(Reuters) - Chip gear maker Applied Materials Inc (AMAT.O) on Thursday forecast current-quarter revenue and sales in its semiconductor business below Wall Street expectations, sending its shares down 5 percent in extended trading.

The company’s forecast added to investor concerns over a slowing smartphone market, which had powered much of the boom in demand for high-end flash memory chips and had prompted Applied Materials’ clients to invest heavily in semiconductor equipment.

“Smartphone sales have been below expectations, particularly for high-end models, and in response, both semiconductor and display suppliers have made adjustments to their capacity planning,” Chief Executive Officer Gary Dickerson said on a post-earnings call.

The world’s largest supplier of tools used by chipmakers forecast a 7 percent growth in semiconductor revenue for the third quarter, which implies $2.71 billion in revenue. That missed estimate of $2.90 billion, according to data and analytics firm FactSet.

Applied Materials, whose results are seen as the bellwether for the chip industry, counts Samsung Electronics Co Ltd (005930.KS), Micron Technologies Inc (MICT.O), Taiwan Semiconductor Co Ltd (5425.TWO) and Intel Corp (INTC.O) as its top customers.

The company said it expects third-quarter revenue in the range of $4.33 billion and $4.53 billion, while analysts on average were expecting $4.53 billion, according to Thomson Reuters I/B/E/S.

    The forecast overshadowed a strong beat on both revenue and profit for the second quarter.

    Total revenue rose 28.8 percent to $4.57 billion, topping estimate of $4.45 billion. Net sales in its semiconductor business rose 24.8 percent to about $3 billion.

    Sales from its display business — which makes flat panel displays for televisions, PCs and smartphones — rose 53.5 percent to $600 million, above estimates of $578.9 million, according to FactSet.

    Excluding items, the company earned $1.22 per share, beating expectations of $1.14.

    Executives during the call played down concerns over China, which accounted for about 25 percent of total revenue in the reported quarter.

    “China is emerging as a spender,” Chief Financial Officer Daniel Durn said on the call.

    Reporting by Munsif Vengattil in Bengaluru; Editing by Sriraj Kalluvila

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