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Applied beats 1Q estimates

The first quarter was strong, the second quarter will be even stronger, and by the way there's a stock split coming, Applied Materials (Nasdaq: AMAT) said Tuesday.

After market close Tuesday, the world's largest maker of chip manufacturing equipment reported fiscal first quarter net income of $328 million, or 80 cents per share. First Call's survey of 29 analysts predicted a profit of 77 cents per share for the quarter ended Jan. 30.

Also Tuesday, Applied Materials announced a 2-for-1 stock split, to take effect Mar. 15 for shareholders of Feb. 25 record. It will be the company's fifth split in eight years.

Shares of Applied Materials closed Tuesday's regular trading at 166 1/2, a gain of 5 7/16 for the session.

Applied expects continued growth in the second quarter, CFO Joseph R. Bronson said during a Tuesday afternoon conference call. Bronson told analysts to expect revenue ranging between $2 billion and $2.1 billion, and earnings per share between $1 and $1.08. That's far above First Call's previous second forecast of 83 cents per share.

First quarter revenue increased to $1.67 billion, a 6 percent gain sequentially and 125 percent improvement year-over-year. Demand for manufacturing at 0.18 micron sizes and smaller was especially strong, said James C. Morgan, Applied's chairman and CEO.

First quarter gross margin of 50.1 percent was flat sequentially, but up from 43.2 percent a year earlier.

New orders of $2.36 billion represent a 43 percent increase from the fourth quarter, and easily surpassed most analyst estimates. A dozen customers placed orders of at least $50 million, including six orders each greater than $100 million, Bronson said during the conference call.

"The industry is consolidating, so as our customers get larger, their orders get larger," said Bronson, though he added that the overall market is also strong. "The fundamentals of the industry are very robust, so that's what driving the (bookings) increase, not just larger orders."

Applied Materials had previously told analysts to expect first quarter bookings ranging between $1.8 billion and $1.9 billion.

"We expect increasing demand for semiconductors to continue throughout 2000, driven by the growth of applications in telecommunication, internet-related and consumer products," Morgan said.

The company expects new orders of at least $2.5 billion in the second quarter, Bronson said.

Wall Street expected a strong quarterly report. Earlier Tuesday, Prudential analyst John Pitzer raised his AMAT price target to $195 per share from $135 and said surging demand for wafer fabrication hardware could add as much as 3 cents per share beyond First Call's consensus figure.

Pitzer also boosted his full year revenue and earnings estimates for Applied. The Prudential analyst now expects Applied Materials to earn $3.88 per share on revenue of $7.9 billion for fiscal 2000, up from a previous forecast of $3.28 per share on sales of $7 billion. For Applied's fiscal 2001, Pitzer now predicts revenue of $9.7 billion and earnings per share of $5.50, compared to previous estimates of $8.2 billion and $4.20, respectively.