Applied Materials Inc investors and analysts will focus on equipment orders when the biggest maker of tools for building computer chips issues fiscal second-quarter results tomorrow.
Orders, examined widely to understand future sales, have fallen since peaking at US$3.6 billion in October. Customers such as Intel Corp, Texas Instruments Inc and Motorola Inc have cut spending on chipmaking equipment because of slowing demand for devices such as personal computers, cell phones and pagers.
``I want to find out if there have been any more order cancellations'' or deferrals, said DeAnne Steele, who helps manage the US$500 million BNY Hamilton Large Cap Growth Fund at the Bank of New York, which owns about 240,000 Applied shares. ``I think we'll probably see some, but I am hoping we'll see a turn.''
Orders are expected to be US$1 billion to US$1.3 billion, almost a third of the US$2.93 billion a year earlier and less than the US$2.4 billion in the first quarter, according to Gunnar Miller, an analyst at Goldman, Sachs & Co, who has Applied on his list of recommended stocks. Ed White, an analyst at Lehman Brothers, expects the company to say it had US$1.3 billion in orders. He rates the company ``strong buy.'' Applied's shares have risen 28 percent since April 9, mostly because of the belief that orders can't continue to decline much longer, analysts said. Applied's orders fell 56 percent from peak to bottom in the last economic decline, in 1998.
``The belief that a sustainable order recovery could begin shortly has been the major driver'' of Applied's share rise, Brett Hodess, an analyst at Merrill Lynch & Co, wrote in a recent note to clients. Hodess rates Applied ``near-term neutral.'' Despite the recent rise, Applied shares have fallen 57 percent since trading at US$114.88, their highest in at least 18 years, on April 7, 2000. They fell on Monday US$2.02 to US$49.69.
The Santa Clara, California-based company was scheduled to issue earnings yesterday shortly after 4pm New York time.
Applied Materials said Feb. 13 that fiscal second-quarter profit would be US$0.32 to US$0.37 a share. It had been expected to earn US$0.49, the average forecast of analysts polled by First Call/Thomson Financial.
Profit now is expected to fall to US$0.33 for the period ended in April, according to First Call, from US$0.54 a year ago. The year-earlier quarter included a gain and charges associated with the company's US$2.8 billion purchase of Etec Systems Inc.
Sales are expected to have fallen to US$1.94 billion from US$2.19 billion a year earlier, according to IBES International Inc. Applied trimmed costs in the quarter as demand slowed for its equipment.
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