Applied Materials, Inc. (AMAT), the world's biggest semiconductor equipment maker, said Wednesday after the markets closed that its fourth quarter profit fell 40% from last year, as sales dropped 25% amid weak demand in a difficult industry environment. However with this, the company returned to black after three consecutive quarters of losses. The company also said it expects to trim its global workforce by 10% to 12% , or about 1,300 to 1,500 positions, over a period of 18 months under a restructuring plan.
The Santa Clara, California-based company reported GAAP net income for the fourth quarter of $137.9 million or $0.10 per share, compared to GAAP net income of $231.1 million or $0.17 per share for the year-ago quarter and a GAAP net loss of $54.9 million or $0.04 per share for the previous sequential quarter.
Excluding items, non-GAAP net income for the fourth quarter was $177.2 million or $0.13 per share, compared to non-GAAP net income of $263.9 million or $0.20 per share in the prior year quarter and a non-GAAP net loss of $1.6 million or break-even per share in the prior quarter.
On average, 27 analysts polled by Thomson Reuters expected the company to earn $0.03 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Gross margin for the fourth quarter was 36.6%, compared to 39.1% in the fourth quarter of last year and 28.3% in the third quarter.
Net sales for the fourth quarter fell 25% to $1.53 billion from $2.04 billion in the same quarter last year. Fourth quarter net sales grew 35% sequentially. Twenty-three analysts had a consensus revenue estimate of $1.32 billion for the fourth quarter.
"Applied delivered a solid fourth quarter led by increased net sales and profitability in our semiconductor equipment business, with improved demand and financial performance in all of our segments," said Mike Splinter, chairman and CEO.
Fourth quarter sales from the company's silicon business fell 12% to $656 million from $744 million a year ago, while sales from display business dropped 40% to $200 million from $334 million last year.
Fourth quarter sales from the company's services business slid 26% to $390 million from $528 million a year earlier, while sales from its energy and environmental solutions business declined 36% to $280 million from $438 million last year.
New orders for the fourth quarter totaled $1.47 billion, down 33.5% from $2.21 billion a year ago but up 37.4% from $1.07 million in the previous quarter. Europe contributed 5% of the new orders for the fourth quarter, while North America contributed 14%, Southeast Asia and China 38%, Taiwan 15%, Japan 8% and Korea contributed 20%.
Applied Materials ended the quarter with a backlog of $2.73 billion, down from $2.95 billion at the end of the previous quarter.
For the fiscal year 2009, the company reported a GAAP net loss of $305.3 million or $0.23 per share, compared to GAAP net income of $960.7 million or $0.70 per share for the fiscal year 2008.
Non-GAAP net income for the fiscal year 2009 was $36.5 million or $0.03 per share, compared to non-GAAP net income of $1.2 billion or $0.87 per share in the prior fiscal year.
Net sales for the fiscal year 2009 fell 38% to $5.01 billion from $8.13 billion last year.
Analysts expected the company to report a loss of $0.14 per share on revenue of $4.80 billion for the fiscal year 2009.
Additionally, Applied Materials said it expects to reduce its global workforce by 10% to 12% , or about 1,300 to 1,500 positions, over a period of 18 months under a restructuring plan, which along with other cost reduction measures are expected to achieve total annualized cost savings of about $450 million when completed.
The company anticipates the pre-tax cost of the plan to be $100 million to $125 million, most of which is expected to be recognized in the first quarter of fiscal 2010.
Looking forward, the company expects expects net sales to grow by more than 30% in fiscal 2010. Analysts currently expect the company to post revenue of $6.20 billion, which is up 24% from the company's fiscal 2009 revenue of $5.01 billion.
During a conference call with analysts, Applied Materials CFO George Davis said that the company expects first quarter net sales to grow 10% to 25% sequentially, implying first quarter revenue of $1.68 billion to $1.91 billion. The company also sees first quarter GAAP earnings of $0.04 to $0.08 per share and non-GAAP earnings of $0.10 to $0.14 per share. Analysts currently expect the company to earn $0.05 per share on revenue of $1.40 billion for the first quarter.
Semiconductor gear makers had been in red due to a difficult semiconductor industry environment. During the recession, demand for manufactured electronic items continues to fall off coercing chipmakers to live through sinking sales. However, recent results have shown a marked improvement in new orders, signaling that the market may have bottomed out.
Among others in the industry, KLA-Tencor Corp. (KLAC) reported first quarter profit that increased slightly from last year, helped by a sharp increase in demand from foundry customers, a one-time non-operating gain and a lower than normal tax rate.
Also last month, Lam Research Corp. (LRCX) reported higher first quarter profit, as lower expenses and improved gross margin helped offset decline in revenues.
Applied Materials shares, which have traded in a range of $7.80 to $14.19 over the past year, closed Wednesday's regular trading session at $13.25, up 25 cents or 1.92%. The stock is currently gaining 15 cents or 1.13% in after hours trading.
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