Applied Materials Weathers Storm – US-FOREX.US
Investors have accepted that 2009 isn’t the year for Applied Materials, making Tuesday’s fiscal-third quarter report an assessment of how well the semiconductor equipment maker has handled the downturn and positioned itself for the future.
In June, Applied Materials
‘ chief executive Mike Splinter warned of more failures in the industry as the number of customers declines. Splinter said that chipmakers are working together to survive weak demand and high development costs, but no such cooperation is occurring among equipment makers like Applied Materials. Splinter said acquisitions in the chip-gear sector are very difficult to conduct, leaving few options for consolidation, other than a company’s outright failure.
Wall Street expects the company to report a loss of 8 cents per share on Tuesday, well off its 14 cents profit recorded in last year’s corresponding period. Since the beginning of the year the company’s market value has risen 32.8%. Peers such as Novellus Systems
and Lam Research
have risen 45.4%, and 36.0%, respectively, over the same period. Meanwhile, the semiconductor industry, as measured by the SPDR S&P Semiconductor
ETF, has gained 56.1%, while the broader Technology SPDR
ETF has risen 27.4%.
The year got off to a rough start. Back in February, Applied Materials reported its first loss in more than five years, thanks to declining semiconductor demand and continued weakness in credit markets. The company also didn’t provide guidance for the rest of the year, only to say sales were expected to fall across its businesses.
Despite the bleak outlook, the company continued to push into the solar energy business. Applied Materials has already moved aggressively into the space over the past three years, but in an interview with Forbes earlier this year, Splinter talked about how he wanted more.