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Applied Materials Delivers Record Results; Guides Higher

Semiconductor systems equipment and display manufacturer Applied Materials, Inc. (NASDAQ: AMAT – $58.29) reported fiscal fourth quarter net income of $982 million and adjusted earnings per share of $0.93, up 41% year-over-year. Revenue rose 20% to $3.97 billion from $3.3 billion in the year-ago period. Analysts surveyed had estimated $0.91 a share on revenue of $3.94 billion. The record annual revenues and operating profit were reflected in all business segments. For the full fiscal year ending October 31, Applied earned $3.25 per share, up from $1.76 for fiscal 2016. Management also reported that year-end backlog for the company’s products are up 32% from last year’s figure to $6.03 billion

       For the fiscal first quarter, Santa Clara, California-based Applied Materials estimates per share earnings of $0.94 to $1.02 on revenue of $4 billion to $4.2 billion (about 25% higher than the first quarter of fiscal 2017), as compared to Street expectations that were calling for earnings of $0.91 a share on revenue of $3.97 billion. The outlook for all of 2018 is also bright. In memory chips, near-term business looks strong, driven by high-performance storage for data centers and increasing smartphone content to support new features, such as 3D cameras. Demand for memory is likely to track the growth of data storage requirements created by the Internet of Things, big data and artificial intelligence. AMAT’s Global Services segment is also growing, differentiating the company from its competitors. Despite trading at these elevated levels, I continue to like Applied Materials for the long-term.


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