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Applied Materials Beats Expectations; Lowers Guidance

Applied Materials, Inc. (NASDAQ: AMAT – $39.38) said it generated revenue of $3.75 billion in the first fiscal quarter of 2019. On an adjusted basis, the semiconductor equipment and display maker reported a gross margin of 44.6%, operating income of $925 million and earnings per share of $0.81 compared to $1.06 last year, but two cents ahead of Street views. According to a company statement: “Applied Materials delivered solid first quarter results in a challenging business environment. As we navigate the current market dynamics, we remain highly optimistic about the long-term and are investing in new technology, products and capabilities that position the company to play a bigger and broader role in the industry’s future. The company said it anticipates fiscal second quarter earnings per share to be in the range of $0.62 to $0.70, and revenue to be in the range of $3.33 billion to $3.63 billion. Analysts had forecast $0.77 and revenue of $3.65 billion. While the current semiconductor cycle is taking its toll on AMAT, over the longer-term the company should regain its footing and provide above-average total returns to investors considering its $0.80 per share dividend yielding 2% covered by strong cash flow.

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