Applied Materials Affirms Forecasts, Citing Emerging Markets

Quote: Applied Materials Inc. (AMAT)Europe. Santa Clara, California-based company expects the total market for chip-manufacturing equipment to be $30 billion to $33 billion this year, Chief Executive Officer Mike Splinter said at a meeting with investors today. It reiterated its May 24 forecast for third-quarter profit of 31 cents to 37 cents a share, excluding certain costs. Sales will drop 3 percent to 10 percent from the previous quarter. In sticking to its outlook, Applied Materials is breaking from the more dour forecasts of some rivals. Novellus Systems Inc. projected third-quarter sales and profit yesterday that fell short of analysts’ estimates, saying customers had become more pessimistic about demand and were delaying orders. Today, Applied’s Splinter said he’s optimistic that the chip industry’s largest manufacturers will maintain their annual budgets. San Francisco. The outlook didn’t reassure investors, who have sent chip stocks down for three straight days. Applied Material’s shares fell 34 cents, or 2.6 percent, to $12.64 today on the Nasdaq Stock Market. The stock has lost 10 percent this year. Industry Barometer Intel Corp. and Samsung Electronics Co. vary their spending on new equipment and factories according to how they foresee demand as much as two years in the future. Their factories can cost more than $3 billion to build and are run 24 hours a day, which makes the companies careful with equipment purchases. India, where people don’t currently own as much technology, Splinter said. Still, demand for personal computers and tablets hasn’t met predictions, he said. And chip foundries -- companies such as Taiwan Semiconductor Manufacturing Co. that do production work on a contract basis -- haven’t ordered as much equipment as expected, Splinter said. KLA-Tencor Corp. (KLAC), whose machinery helps chipmakers ensure that each stage of production is completed succe...
Open whole article (external link)