News Article
Applied tops Q4 expectations
but warns of grim Q1
Semiconductor equipment behemoth Applied Materials has exceeded its own and most analysts expectations for the fourth quarter (ending October 31) but the company is warning of a dramatic drop off in sales in the first quarter of next year.
Despite reporting healthy Q4 sales of $2.2 billion (up 80 per cent on the corresponding period last year) and gross profits of 46.6 per cent (40.5 per cent), the California-based company believes that its Q1 turnover could slump by almost a quarter.
The company is projecting that Q1 sales will be between $1.7 billion and $1.76 billion, a fall of 20%-23% over the previous quarter.
In yet another gloomy forecast, the company believes that its worldwide orders will plummet by 35 per cent in the first quarter as a result of a slowdown in demand in the Chinese market.
This is particularly worrying for the industry because Applied has up until now been one of the few companies in the sector to maintain a growing order book and robust revenues in the current tough market conditions.
If Applied – the worlds largest supplier of wafer fabrication solutions to the semiconductor industry - is beginning to suffer, then smaller companies can be sure that they will be in for tough times too.
During the fourth quarter, the company saw its order book increase 105 per cent year on year and – perhaps more significantly – by seven per cent over the previous period.
Applied now has a backlog of orders worth $3.37 billion – up both year on year and sequentially. But the firm believes that orders are now unlikely to pick up again until an expected market recovery in the second half of 2005.
Speaking in response to the Q4 results, Applieds president and CEO Mike Splinter admitted: "We dont believes there is going to be the same amount of business over the next three months."
This will be especially true of 200mm wafer technology, demand for which has dropped off steeply in recent months as the large chip makers make the transition to the more efficient 300mm technology.
Applieds 300mm order book on the other hand is looking very healthy, 300mm-related equipment accounting for 84 per cent of orders during Q4.
Splinter said that he expected the 300mm market to remain robust. "All the signs are that people are still investing in 300mm."
But he sounded a cautionary note. "If they stop investing in 300mm, if there is more weakness, [the business climate] could get worse."
Despite reporting healthy Q4 sales of $2.2 billion (up 80 per cent on the corresponding period last year) and gross profits of 46.6 per cent (40.5 per cent), the California-based company believes that its Q1 turnover could slump by almost a quarter.
The company is projecting that Q1 sales will be between $1.7 billion and $1.76 billion, a fall of 20%-23% over the previous quarter.
In yet another gloomy forecast, the company believes that its worldwide orders will plummet by 35 per cent in the first quarter as a result of a slowdown in demand in the Chinese market.
This is particularly worrying for the industry because Applied has up until now been one of the few companies in the sector to maintain a growing order book and robust revenues in the current tough market conditions.
If Applied – the worlds largest supplier of wafer fabrication solutions to the semiconductor industry - is beginning to suffer, then smaller companies can be sure that they will be in for tough times too.
During the fourth quarter, the company saw its order book increase 105 per cent year on year and – perhaps more significantly – by seven per cent over the previous period.
Applied now has a backlog of orders worth $3.37 billion – up both year on year and sequentially. But the firm believes that orders are now unlikely to pick up again until an expected market recovery in the second half of 2005.
Speaking in response to the Q4 results, Applieds president and CEO Mike Splinter admitted: "We dont believes there is going to be the same amount of business over the next three months."
This will be especially true of 200mm wafer technology, demand for which has dropped off steeply in recent months as the large chip makers make the transition to the more efficient 300mm technology.
Applieds 300mm order book on the other hand is looking very healthy, 300mm-related equipment accounting for 84 per cent of orders during Q4.
Splinter said that he expected the 300mm market to remain robust. "All the signs are that people are still investing in 300mm."
But he sounded a cautionary note. "If they stop investing in 300mm, if there is more weakness, [the business climate] could get worse."
