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Applied Materials warns of 'challenging economy'

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CIOL Bureau
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SAN FRANCISCO, USA: Chip gear maker Applied Materials Inc (AMAT.O) gave a cautious quarterly revenue outlook and warned it expects to be affected by a tough economy.

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Economic uncertainty in the United States and Europe has hurt demand for consumer electronics in recent months, leading many chip manufacturers to put expansion plans on hold.

Applied Materials, which sells manufacturing equipment to Intel Corp (INTC.O), Samsung Electronics (005930.KS) and other chipmakers, said it expects revenue in the fiscal first quarter to be down 5 to 15 per cent sequentially, implying revenue of $1.853 billion to $2.071 billion.

Analysts' average forecast is $2.066 billion, according to Thomson Reuters I/B/E/S.

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Applied Materials had $1.6 billion in orders for equipment during the fourth quarter, a third less than in the previous quarter.

Chief Financial Officer George Davis told Reuters that orders likely bottomed out during the quarter and that they would begin to recover in the current quarter and early next year, although he said it would take time for that to translate into higher revenue.

"The macro economy is playing a bigger role than in normal economic times," he said.

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Revenue in the quarter was $2.18 billion, down 24 per cent. Analysts on average forecast revenue of $2.151 billion for the fourth quarter ended October 30.

Applied Materials said net profit, excluding items, in the fourth quarter was $271 million, or 21 cents a share, compared with $476 million, or 36 cents, in the year-ago quarter. The company had been expected to post net profit of 19 cents a share in the fourth quarter.

Applied Materials shares fell 3 per cent to $12.10 in extended trading after closing down 1.3 per cent at $12.47.

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