SANTA CLARA (dpa-AFX) - Applied Materials, Inc. (AMAT), the world's biggest semiconductor equipment maker, said Wednesday after the markets closed that its third quarter profit nearly quadrupled from last year, helped by strong performance of its solar and services businesses as well as fewer charges. The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly sales. However, the company forecast fourth quarter sales and earnings below analysts' current consensus estimates.
The Santa Clara, California-based company reported GAAP net income for the third quarter of $476 million or $0.36 per share, compared to $123 million or $0.09 per share for the year-ago quarter.
Excluding items, non-GAAP net income for the third quarter was $467 million or $0.35 per share, compared to $234 million or $0.17 per share in the prior year quarter.
On average, 19 analysts polled by Thomson Reuters expected the company to earn $0.33 per share for the third quarter. Analysts' estimates typically exclude special items.
Gross margin for the third quarter improved to 42.5% from 34.2% a year ago.
Net sales for the second quarter rose 11% to $2.79 billion from $2.52 billion in the same quarter last year. Eighteen analysts had a consensus revenue estimate of $2.68 billion for the third quarter.
'Applied delivered solid third quarter results, with earnings and revenue at the upper end of our expectations,' said Mike Splinter, chairman and chief executive officer. 'While the fundamental drivers of our markets remain strong, we are seeing softness in our business resulting from the uncertain economic environment and overcapacity in solar.'
Third quarter sales from the company's silicon business fell to $1.40 billion from $1.45 billion a year earlier, while sales from display business increased to $223 million from $216 million last year.
Third quarter sales from the company's services business rose to $603 million from $468 million a year ago, while sales from its energy and environmental solutions business surged to $563 million from $387 million last year.
New orders for the third quarter totaled $2.39 billion, down 12.5% from $2.73 billion in the year-ago quarter. Europe contributed 11% of the new orders for the third quarter, while North America contributed 15%, Southeast Asia 4%, China 22%, Taiwan 18%, Japan 15% and Korea contributed 15%.
During the third quarter, The company repurchased 2 million shares of its common stock for $25 million, and ended the quarter with cash, cash equivalents and investments of $6.81 billion that included proceeds from the $1.75 billion of notes issued during the quarter.
In May, Applied Materials agreed to buy Varian Semiconductor Equipment Associates, Inc. (VSEA) for $63 per share or about $4.9 billion in cash to strengthen its leadership position in the semiconductor industry. Varian shareholders approved the deal earlier this month. The closing of the merger is subject to the satisfaction or waiver of certain other closing conditions, including, U.S. Antitrust clearance. The deal is expected to be completed during the second half of 2011.
Looking forward, the company said it expects fourth quarter net sales to be down in the range of 15% to 30% quarter over quarter, implying revenue of $1.95 billion to $2.37 billion. The company also forecast fourth quarter non-GAAP earnings to be in the range of $0.16 to $0.24 per share. Analysts currently expect the company to earn $0.33 per share on revenue of $2.66 billion for the fourth quarter.
Among other semiconductor equipment makers, KLA-Tencor Corp. (KLAC) last month reported fourth quarter profit that more than doubled from last year, as revenue jumped 60% on strong demand.
Also last month, Lam Research Corp. (LRCX) reported reported lower fourth quarter profit, as weaker gross margins offset revenue growth. However, both earnings per share and revenues for the quarter came in ahead of Street estimates.
Novellus Systems Inc. (NVLS) last month reported a 2% rise in second quarter profit, helped by improved margins and moderate sales growth. The company's quarterly earnings per share came in ahead of Street expectations, but revenues fell short of estimates.
Applied Materials shares, which have traded in a range of $10.27 to $16.93 over the past year, closed Wednesday's regular trading session at $11.36, down 8 cents. The stock is currently losing 55 cents or 4.84% in after hours trading.
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