Applied Materials to miss target
The company's stock dips after it warns that its third fiscal quarter earnings will fall below market expectations and gets downgraded by an analyst.
As a result, the company's shares were off more than 3 percent today, dropping to 28.5625 when the markets closed. The stock has traded as high as 54.1875 and as low as 25.5 during the past 52 weeks.
BancAmerica Robertson Stephens analyst Susan Billat cut her recommendation on the semiconductor equipment maker today to "long-term attractive" from "buy" and trimmed her fiscal year 1998 earnings estimates on the company by 25 cents, down to $1.10 per share. Billat also reduced her fiscal year 1999 estimates substantially, to 80 cents per share from $1.75 a share.
The Fortune 500 company said it expects net sales in the $850 million to $885 million range and earnings of 15 cents to 18 cents per diluted share. Wall Street, on average, expected Applied Materials to post earnings of 21 cents per share, according to a First Call report.
Company executives are blaming the subpar performance on the Asian economic crisis, delayed orders, and lagging PC sales. The announcement came after markets closed for the day.
"We are currently evaluating ways to keep costs in line with expected revenues as a result of business conditions," said Jeff Lettes, a spokesman for Applied Materials. The company also will take a charge of about $25 million to $30 million for restructuring.
Lettes added the company is confident about long-term business opportunities, but "the semiconductor industry is currently experiencing a significant slowdown in demand."
Applied Materials will release its financial data August 11 for the third fiscal quarter that ends July 26. Meanwhile, executives said new orders for the fourth fiscal quarter "will be significantly lower" than the $1 billion seen in the second quarter.
Chipmakers across the board have faced slim revenues in light of the financial turmoil in Asia. National Semiconductor ran into stock troubles earlier this year when it warned of slumping sales.
The company announced in May it would cut its workforce from 15,000 to about 14,000 by this month. Intel and National also have proposed layoffs.