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Applied Materials blows past 3Q forecasts

Applied Materials Inc. (Nasdaq: AMAT) easily bested third quarter earnings forecasts.

In fiscal third quarter results released after market close Tuesday, the world's largest maker of equipment for chip manufacturing posted net income of $244 million, or 61 cents a share. First Call's survey of 29 analysts predicted per-share earnings of 53 cents for the quarter ended Aug. 1.

Shares of Applied Materials rose 1 1/4 to 71 3/4 in regular trading prior to the earnings report, but the stock price was down in after hours trading on Instinet.

Third quarter sales increased to $1.43 billion, up 28 percent sequentially and up 62 percent year-over-year. "We are extremely pleased with our record performance this quarter," said James C. Morgan, chairman and CEO. "Our customers are experiencing the early stages of a broad-based recovery, fueled by low inventories and strong demand across all product categories, with particular strength in communications and consumer electronic products."

Gross margin rose to 48.7 percent, up from 46.3 percent in the second quarter.

Demand for 0.18 micron technology helped drive new orders up to $1.46 billion in the third quarter, a 5 percent gain sequentially and 140 percent gain from a year ago. North America generated 28 percent of new orders, followed by 26 percent in Taiwan, which has a large concentration of semiconductor companies. Japan and Europe each yielded 16 percent of Applied Materials' orders. Korean orders made up 8 percent.

Applied Materials ended the the quarter with a backlog of $1.34 billion. The company said it has gained share in all its markets. Morgan predicted the chip capital equipment industry may double within the next five years, as chips continue moving to smaller linewidths, new materials and new wafers.>