Applied Materials Reports Sales Above Expectations
Applied Materials, the largest producer of chipmaking equipment, could see a third-quarter sales report that exceeds analyst expectations, despite its solar cell and display manufacturing business, which was damaged as a result of oversupply, as well as weak pricing.
According to Bloomberg Business Week, Ben Pang, an analyst at Caris & Co. stated:
“For the first time you have huge drivers. Personal-computer units are in the hundreds of millions, versus the cell-phone market, which is in the billions.”
Pang goes on to explain that Applied’s foundry customers are increasing their output of chips for the smartphone market, in order to keep pace with the demand for chips in smartphones, tablets, and other mobile devices. Because of this demand, it is possible that Applied will see a bigger profit than originally anticipated.
This increase in chip production has helped to make up for the lack of demand in solar panels, due to Europe’s increased production, as well as subsidy cuts, which have triggered a global “glut” of solar panels, causing prices to plummet.
“Applied Materials’ stock has fallen 16 percent since the end of March when it forecast fiscal 2012 results below expectations. It now trades at the equivalent of 11 times expected earnings…Applied Materials said revenue in the second quarter ending in April was $2.54 billion, down from $2.86 billion in the year-ago period.”
According to the Wall Street Journal:
“For the year, the company now expects results at the high end of its March view, which called for a profit of 85 cents to 95 cents a share and revenue of $9.1 billion to $9.5 billion.”
In extended trading on Thursday, shares of Applied Materials rose by 1.43 percent, after closing down by 1.69 percent at $10.48 per share on the NASDAQ.
Check out more information about Applied Materials here:
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