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Applied Mat. warns again
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July 10, 1998: 5:59 p.m. ET
Chip equipment maker sees 3Q profits below views due to orders shortfall
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NEW YORK (CNNfn) - Beset by weakness in the semiconductor industry, the world's largest maker of chip-making equipment, Applied Materials Inc., now expects its financial results for its fiscal third quarter to fall below Wall Street expectations.
The Santa Clara, Calif.-based company said late Friday that customers are delaying orders, rescheduling equipment deliveries and reducing spending on wafer fabrication.
The announcement came after the closing bell on Friday. The stock (AMAT), which climbed 1/2 to 29-1/2, was halted during late session trading.
Applied Materials said it currently expects new orders of $600 million to $675 million and net sales of $850 million to $885 million.
As a result, earnings for the fiscal quarter ending July 26 will range between 15 cents and 18 cents a diluted share. Analysts had anticipated 21 cents a share, according to First Call.
The forecast excludes a previously announced restructuring charge of $25 million to $30 million to eliminate about 1,000 jobs. As reported on May 26, the charge will lower net income by about 5 cents a share.
Applied Materials will release its financial results on Aug. 11.
The company acknowledged the impact of overcapacity in the market for dynamic random access memory chips and economic conditions in Asia have been known for some time. But the near-term effects will be more severe than previously anticipated.
Also, customers are seeking to assess new products and technology. Accordingly, Applied Material's new orders for the third and fourth fiscal quarters of 1998 will be significantly lower than the $1.03 billion achieved for the second fiscal quarter.
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Applied Materials
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