Applied Materials Profit Rises

(RTTNews) - Applied Materials Inc (AMAT) Thursday reported a surge in third-quarter profit, as the semiconductor equipment maker's sales and margins climbed. While quarterly earnings topped Wall Street estimates by a penny, sales fell short of expectations.

Looking ahead, the company provided earnings guidance for the fourth quarter, the midpoint of which is indicated to top expectations, while its sales outlook is almost in line with estimates.

CEO Gary Dickerson said Applied Materials is focusing on areas that have strong impact for its customers, and also driving improvements in execution and speed.

Applied Materials shares gained 2 percent in after-hours trade on the Nasdaq.

The results come as chip companies buy equipment to make smartphone and memory chips; demand for Applied Materials' sheds some light on the demand pattern of the the electronics market. In a strategic move to tap the market, Applied Materials in September agreed to acquire Japanese peer Tokyo Electron for about $9.4 billion.

For the third quarter, Applied Materials posted quarterly net earnings of $301 million or $0.24 per share, compared with $168 million or $0.14 per share last year.

Excluding items, adjusted earnings for the quarter were $0.28 per share, compared with $0.18 per share in the prior year.

On average, 19 analysts polled by Thomson Reuters expected earnings of $0.27 per share for the quarter. Analysts' estimates typically exclude special items.

The Santa Clara, California-based company's sales for the quarter climbed 15 percent to $2.27 billion from $1.98 billion last year. Nineteen analysts had a consensus revenue estimate of $2.29 billion for the quarter.

Segment-wise, Applied Global Services sales rose 6 percent year-over-year, with Silicon Systems Group sales also making gains. Display sales fell 19 percent.

Growth was seen in the U.S., Japan and China, while Korea, Europe and Taiwan lagged.

On an adjusted basis, gross margin for the quarter climbed 260 basis points from last year to 45.5 percent, and operating margin to 21.1 percent from 15.8 percent.

Orders in the quarter were strong, up 27 percent from last year to $2.48 billion.

For the fourth quarter, Applied Materials expects adjusted earnings of $0.25 to $0.29 per share. Sales are expected to increase or decline 3 percent sequentially, implying a range of $2.20 billion to $2.34 billion.

Analysts currently expect earnings of $0.26 per share on sales of $2.28 billion for the quarter.

Last September, Applied Materials agreed to buy Japanese peer Tokyo Electron Ltd in a $9.39 billion all-stock deal, which is to close in the second half of 2014. Applied Materials shareholders will own about 68 percent of the new company, while Tokyo Electron shareholders will own the rest.

The merged company will be incorporated in The Netherlands, having a new name, dual headquarters in Tokyo and Santa Clara, as well as a dual listing on the Tokyo Stock Exchange and the Nasdaq.

Applied Materials stock closed Thursday at $21.16, up $0.19 or 0.91%, on a volume of 10.4 million shares. In after hours, the stock gained $0.40 or 1.89% at $21.55.