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Thu, May 15, 2003 - Page 12 News List

Applied Materials has second quarter loss as sales falter

BLOOMBERG , SANTA CLARA, CALIFORNIA

Applied Materials Inc, the world's biggest maker of computer-chip production equipment, had a second-quarter loss of US$62.1 million as sales fell and it had to close factories and cut jobs.

The net loss was US$0.04 a share, compared with net income of US$52 million, or US$0.03, in the same quarter last year. Sales in the quarter that ended April 27 dropped 4.3 percent to US$1.11 billion from US$1.16 billion, chief financial officer Joe Bronson said.

Orders in the quarter fell 42 percent to US$971 million -- the first time since October 1998 they were less than US$1 billion -- and Bronson forecast little change in the current quarter. Chief executive Mike Splinter took over from Jim Morgan after two years of falling sales with a mandate to cut costs and expand services to chipmakers struggling with declining demand for electronics.

"Consumers of chip equipment are being cautious with buying additional capacity," said Jim Grossman, who helps manage US$57 billion at Thrivent Investment Management and owns Applied shares. "The environment is quite difficult out there."

Profit in the current quarter will be US$0.03 to US$0.04 a share before US$50 million to US$100 million in restructuring costs, Bronson said. Sales will be unchanged or slightly less than this quarter's revenue. The company had net income of US$0.07 and sales of US$1.46 billion in last year's third quarter.

New orders, a gauge of sales in three to six months, will be little changed in the quarter ending in July, Bronson said. New orders were US$1.78 billion in the third quarter last year and US$1.69 billion in the second period of the last fiscal year.

Second-quarter orders were below the company's February forecast of slightly more than US$1.02 billion. The shortfall was the result of lower-than-expected demand for equipment that forms microscopic patterns on glass plates. The instruments, which sell for about US$15 million apiece, haven't sold in two quarters, Bronson said.

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