Applied Materials Profit Jump 85%; Shares Off On Outlook

   DOW JONES NEWSWIRES 
 

Applied Materials Inc.'s (AMAT) fiscal second-quarter earnings rose 85% to the top of its guidance range on sales that topped targets, as the semiconductor-equipment maker again reported a growing solar business.

But shares were down 2.1% at $13.42 after hours, as investors tuned into a largely downbeat outlook for the third quarter. Through the close, the stock has risen 9.8% in the last year, moderately behind the wider market's increase.

Looking to the current quarter, the company predicted earnings largely below estimates, calling for 31 cents to 37 cents a share on a sequential sales decline range from 3% to 10%. Analysts surveyed by Thomson Reuters were expecting earnings of 37 cents, with a revenue estimate that implied a 2.6% sequential drop.

The company--which makes tools used to make chips, television screens and solar panels--called the quarter one of the best in its history. The company has been reporting sharp revenue increases and margin improvement in recent quarters.

The latest period included record sales in its solar business, according to Chairman and Chief Executive Mike Splinter.

Earlier this month, Applied Materials agreed to take over Varian Semiconductor Equipment Associates Inc. (VSEA) for $4.9 billion in cash, a move that broadens its offerings for higher-performance chips such as those needed in energy-efficiency technologies and mobile devices. The deal is one of the largest within a glut of consolidation in the semiconductor sector.

For the quarter ended May 1, Applied Materials posted a profit of $489 million, or 37 cents a share, up from $264 million, or 20 cents a share, a year earlier. Excluding charges related to takeovers, earnings rose to 38 cents a share from 22 cents.

Net sales increased 25% to $2.86 billion. Sequentially, sales rose 6.6%.

In February, Applied Materials forecast upbeat results, predicting earnings of 34 cents to 38 cents a share with sales ranging from flat to up 5% sequentially.

Gross margin rose to 41.5% from 40.4%.

-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; [e-mail]