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Applied Materials shines
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May 10, 2000: 6:16 p.m. ET
Chip equipment maker reports solid earnings amid strong demand
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NEW YORK (CNNfn) - Applied Materials matched Wall Street's fiscal second-quarter earnings estimates as accelerating demand for semiconductors resulted in record operating earnings and revenue.
And executives at the company, the world's leading supplier of the equipment used to manufacture computer chips, said they expect continued robust sales of their products as chip makers scramble to add capacity to their operations.
Excluding one-time items and the acquisition of Etec Systems in March, Applied Materials reported operating earnings of $454 million, or 55 cents per diluted share, during the period ended April 30, meeting the consensus estimate of analysts polled by earnings tracker First Call.
That was up more than 224 percent from $140 million, or 18 cents per diluted share during the same period last year. Revenue for the quarter came in at $2.19 billion, up 87 percent from $1.17 billion last year.
Including one-time items, Applied Materials' reported a net income of $468.9 million, or 54 cents per diluted share.
Despite the strong results, shares of Applied Materials (AMAT: Research, Estimates) which slipped 6 points to 84-5/8 in heavy-volume on Nasdaq Wednesday, tumbled another 7 to 77-5/8 in after-hours trade.
Click here to see which stocks are moving in after-hours activity
Executives at Applied Materials in Santa Clara, Calif., attributed the strong showing to greater-than-expected global demand for semiconductors, especially those used in portable communications devices and consumer appliances.
 The company reported record new orders of $2.93 billion during the quarter, up 101 percent from $1.46 billion during the same quarter last year.
"The quarter marked another record of milestone growth," Joseph Bronson, Applied Materials chief financial officer, told analysts during a conference call Wednesday evening.
New orders during the quarter also were driven by chip makers' increased investments in advanced manufacturing equipment for next-generation chip technologies, Bronson said.
Because of the strong demand, Applied Materials said it expects semiconductor capital equipment spending to rise 53 percent this year.
"We do not believe that spending is at levels that will exceed demand at this time," Bronson said. "We expect orders for our equipment to be robust for the remainder of this year."
Overall, Bronson said the company expects the semiconductor-equipment market to grow 56 percent this year, an estimate that it had pegged at 46 percent just three months ago.
Specifically, stronger-than-expected demand for flash memory, digital-signal processors and custom chips designed for specific applications are behind the higher forecast, according to Bronson. He also said he expects demand for dynamic random access memory chips, commonly used in personal computers, to accelerate later in the year. 
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