Applied Materials Results Top Estimates

(RTTNews) - Semiconductor equipments maker Applied Materials, Inc. (AMAT) said Thursday after the markets closed that it swung to a fourth quarter profit, helped by higher sales and the absence of hefty impairment and restructuring charges that it took in the prior year period.

The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly sales. However, the company gave a downbeat outlook for the current quarter.

"This has been a transformative year for Applied Materials as we shaped a more competitive company, reduced overhead expenses, stepped up investment in product development and built momentum for profitable growth," said Gary Dickerson, president and chief executive officer. "As we look ahead to 2014, we expect stronger investment by our semiconductor and display customers and major technology inflections in transistor and memory that play to our strengths."

Applied Materials shares are currently gaining 0.23% in after hours trading after closing the day's regular trading session at $17.56, down 11 cents. The shares trade in a 52-week range of $9.95 to $18.18.

In September, Applied Materials agreed to buy Japanese peer Tokyo Electron Ltd. in a $9.39 billion all-stock deal. The deal, which is billed as a merger of equals, is expected to close in mid to second half of 2014.

Following the closure of the deal, Applied Materials shareholders will own about 68% of the new merged company, while Tokyo Electron shareholders will own about 32%. 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.

For the fourth quarter ended October 27, 2013, Santa Clara, California-based Applied Materials reported net income of $183 million or $0.15 per share, compared to a net loss of $515 million or $0.42 per share for the year-ago quarter.

Excluding items, adjusted net income for the fourth quarter was $228 million or $0.19 per share, compared to $70 million or $0.06 per share in the prior year quarter.

On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.18 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Net sales for the fourth quarter rose 21% to $1.99 billion from $1.65 billion in the same quarter last year. Sixteen analysts had a consensus revenue estimate of $1.98 billion for the fourth quarter.

Higher sales in Japan, China, Korea and Taiwan more than offset lower sales in the U.S. and Europe.

Adjusted gross margin for the quarter improved to 42.0% from 38.4% a year ago, while adjusted operating margin for the quarter increased to 16.2% from 6.9% last year.

Fourth quarter new orders grew 42% year-over-year to $2.09 billion, driven by strengthening demand in the company's Silicon Systems Group.

Looking forward, the company said it expects first quarter net sales to be up 3% to 10% sequentially, implying net sales of $2.05 billion to $2.19 billion. The company also forecast first quarter adjusted earnings to be in the range of $0.20 to $0.24 per share.

Analysts currently expect the company to earn $0.24 per share on revenue of $2.21 per share for the first quarter.