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After hours: Applied Materials gets earnings jolt

Shares of the company are heavily traded in after-hours activity after the chip equipment maker reports better-than expected results for the fiscal fourth quarter.

Shares of Applied Materials were heavily traded in after-hours activity after the chip equipment maker reported better-than expected results for the fiscal fourth quarter, while also saying earnings for the next quarter would be flat.

"It was a very solid quarter, but the guidance they gave for the January 2001 quarter was clearly weak," said Eric Chen, an analyst at Chase Hambrecht & Quist.

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Applied Materials avoids fourth-quarter chip pitfall
James Morgan, CEO, Applied Materials
Excluding charges, the Santa Clara, Calif.-based company reported fourth-quarter net income of $664 million, or 77 cents a share, compared with net income of $303 million, or 37 cents a share, for the year-ago quarter. Revenue rose to $2.92 billion from $1.61 billion in last year's fourth quarter.

Wall Street expected the company to earn 76 cents a share, the consensus estimate of 26 analysts surveyed by First Call/Thomson Financial.

In regular trading, the shares gained $1.31 to $42.75. In after-hours trading, the stock initially gained about $4 but slipped back to a gain of just 56 cents on volume of 3.75 million shares, making it the most actively traded stock after the markets closed.

During a post-announcement conference call, the company said earnings for the first quarter would fall between 75 cents and 78 cents a share. The company also said bookings of new orders could decline by as much as 10 percent from fourth-quarter bookings of $3.6 billion.

Applied is "trying to set the bar as low as possible, so they can jump over it," said Mark Fitzgerald, an analyst at Banc of America Securities. "We're in the high-risk part of the cycle."

The semiconductor industry has experienced booming growth over the past few years, but some analysts are concerned that the growth might be slowing. Fitzgerald said that chipmakers such as Intel have started to miss estimates, which might pinch the earnings performance of Applied and other companies that make equipment used to manufacture chips.