Applied Materials short on orders

The chip-equipment maker says that deferred capital expenditures by customers caused a larger shortfall than expected in the company's first fiscal quarter.

John G. Spooner Staff Writer, CNET News.com
John Spooner
covers the PC market, chips and automotive technology.
John G. Spooner
2 min read
Applied Materials, the chip-equipment maker, said Friday that orders placed during its first fiscal quarter will fall short of previous expectations.

Citing economic uncertainties, Applied Materials said orders placed during its first quarter will be about 35 percent below the fourth-quarter tally of $1.56 billion. The company originally forecast a 20 percent decline in orders for the quarter, which ends Jan. 26.

"Due to ongoing economic weakness and geopolitical uncertainties, customers deferred capital expenditures, causing a larger order shortfall than expected," James Morgan, company CEO, said in a statement.

Orders are an indication of future sales. Applied Materials originally said that it expected its first-quarter revenue to decline by at least 20 percent from its fourth-quarter mark of $1.45 billion. The company is expected to earn 2 cents per share on revenue of $1.16 billion for its first quarter, according to First Call.

Applied Materials continues to suffer from the semiconductor malaise, created by the economic downturn of 2001. Though the semiconductor market has been slowly recovering, and chip sales are improving, many chipmakers have cut capital expenditures to save on costs. Intel cut capital expenditures by $1 billion for 2003, meaning it will spend less on chip equipment during the year.

Meanwhile, the company said Thursday that it would cut about 165 jobs at its Austin, Texas, facility

Applied Materials also said it would post a charge associated with job cuts and other costs, announced on Nov. 4, 2002. Its pretax restructuring charge is now expected to be approximately $100 million, the company said Friday.

Applied Materials will report earnings for its first fiscal quarter on Feb. 11.

Reuters contributed to this report.