Applied Materials, An Upside Surprise, And Layoffs (AMAT)

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Applied Materials Inc. (NASDAQ: AMAT) managed to close at what looks to be a decade low, and it was right under $10.00 ahead of earnings. The semiconductor capital equipment giant posted earnings of $0.20 non-GAAP EPS on $2.04 billion in revenue.   Thomson Reuters (First Call) estimates were for $0.14 non-GAAP EPS and $1.94 billion in revenue. 

The company also reported $2.21 billion in new orders,which is a better indication of whether the earnings and revenues for next quarter will beatestimates.  Estimates for next quarter are $0.16 EPS on $1.95 billion inrevenues.

Applied has also announced that it is entering into a broad-basedrestructuring plan and it will shed 12% of its workforce or some 1,800jobs.  The goal is to save some $400 million annually.

This $2.21 billion in new orders is not the revenue guidance for nextquarter, but it is good that this number is still above analysts’ estimates.  Keep in mind thatuntil we have guidance from the conference call that this is unfinishedbusiness. 

Shares closed down over 6.5% at $9.95, but the stock is back up to $10.65 in after-hours trading.

Jon C. Ogg
November 12, 2008