Continued weakness in the chip market weighed on the second quarter results
of Applied Materials (AMAT 19.66, -0.20 ). The company unveiled a drop
in sales, new orders, and earnings after yesterday's close, then provided a
disappointing outlook for its third quarter.
The company reported revenues decreased 15% year-over-year to $2.15 billion.
Analysts were expecting sales of $2.13 billion.
New orders for the quarter totaled $2.41 billion, which is 9% lower than last
year. The decline was limited to the company's silicon segment, in which new
orders were nearly halved from the prior year.
Earnings per share dipped more than 20% from the same quarter last year,
falling to $0.26 per share. Still, the drop was less severe than analysts were
expecting. On average, analysts estimated that earnings would total $0.22 per
share for the quarter.
Chip orders are expected to continue their decline. According to Reuters,
the company forecast a 25% to 35% decline for chip equipment spending this year,
which is worse than the 5% to 15% drop previously expected.
Reflecting the weakness, Applied Material forecast third quarter earnings of
just $0.10 to $0.14 per share during its quarterly conference call. The outlook
fails to meet the $0.25 per share that analysts forecast.
