Applied Materials sets 1Q EPS target

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Applied Materials (Nasdaq: AMAT) beat the Street in its fourth quarter and set a first quarter earnings target of up 78 cents per share.

During the chip manufacturing equipment maker's conference call Wednesday, CFO Joseph Bronson told analysts he now sees earnings per share ranging between 75 and 78 cents, slightly below First Call's current consensus forecast of 80 cents. Applied Materials is looking for first quarter revenue ranging between $2.9 billion and $2.95 billion.

The company's outlook apparently soothed investors worried about recent reports of spending cutbacks and slowing growth in markets that use chips made by Applied Materials customers. Shares of Applied Materials rose to 43.35 in afterhours activity on the Island electronic communications network, following the fourth quarter report.

Applied Materials stock gained 1.3125 to 42.75 in Wednesday's regular trading, prior to the release of quarterly results.

Applied Materials earned $664 million, or 77 cents a share, on fourth quarter sales of $2.92 billion. First Call consensus expected the chip-equipment maker to earn 76 cents a share in the quarter.

The $2.92 billion in sales marks an 81 percent improvement from the year-ago quarter when it earned $303 million, or 37 cents a share, on sales of $1.61 billion.

"This has been an outstanding year for Applied Materials," said CEO James Morgan in a prepared release. "I am very proud of our global team for capitalizing on worldwide demand for semiconductors to deliver the strongest year in the company's history, with revenue almost double that of last year."

For the fiscal year, Applied Materials raked in $2.05 billion, or $2.39 a share, on sales of $9.56 billion compared to a profit of $757 million, or 92 cents a share, on sales of $5.1 billion in fiscal 1999.

In the quarter, Applied recorded $3.6 billion in new orders, up 10 percent from the third quarter and 113 percent from the year-ago quarter.

Gross profit margins improved to 51.7 percent, up from 50.9 percent in the third quarter and 49.6 percent in the fourth quarter of fiscal 1999.

Michael O'Brien, an analyst at Wit SoundView, predicted Applied Materials would see $3.6 billion in new orders, but pegged it for total sales of at least $2.95 billion.

Applied exited the quarter with a backlog of $4.38 billion in orders, up from $3.69 billion last quarter.

On a geographic basis, sales into North America shot up 29 percent from the same period last year, while sales into Japan and Europe improved 21 percent and 15 percent, respectively.

Last quarter, Applied Materials topped analysts' estimates when it posted a profit of $604 million, or 70 cents a share, on sales of $2.73 billion.

However, its shares have struggled mightily in the past few months, falling from a 52-week high of $115 in April to a low of $38.50 earlier this month.

Twenty-five of the 27 analysts tracking the stock maintain either a "buy" or "strong buy" recommendation.

Analysts are forecasting a profit of $3.38 a share in fiscal 2001.