Applied Materials smells like gains, stock declines across the board

Shares of Applied Materials Inc. declined in Thursday’s extended session after the semiconductor manufacturing equipment maker missed earnings, revenue and guidance and flagged ongoing supply chain issues.

Applied materials AMAT,
reported net income of $1.54 billion, or $1.75 per share, for the second fiscal quarter. Adjusted earnings, which exclude the impact of stock-based compensation and other items, were $1.85 per share compared to $1.63 per share in the prior year period. Revenue increased to $6.25 billion from $5.58 billion in the year-ago quarter.

Analysts polled by FactSet had forecast adjusted earnings per share of $1.90 on sales of $6.35 billion. Shares fell about 5% in after-hours trading after falling 0.5% in the regular session to close at $110.74. The stock is down about 10% over the last 12 months, right in line with the performance of the S&P 500 Index SPX,

Demand for the equipment Applied Materials makes is high as silicon wafer makers, known as fabrication facilities or “fabs,” have had more orders than capacity during the COVID-19 pandemic than semiconductors used to manufacture Electronics, automobiles and other products needed are in short supply for about two consecutive years. However, Applied Materials also needs chips and other components to manufacture its devices and struggles with the same supply chain issues.

“Demand for Applied Materials’ products and services has never been stronger, yet we remain constrained by ongoing supply chain issues,” Chief Executive Gary Dickerson said in a statement.

For the third quarter, Applied Materials forecast adjusted earnings per share of $1.59 to $1.95 on sales of $5.85 to $6.65 billion. According to FactSet, analysts on average had expected adjusted earnings per share of $2.04 on sales of $6.68 billion.

Other fab equipment manufacturers have unanimously noted that their sales are being held back due to supply shortages amid high demand, according to earnings reports from ASML Holding NV ASML,
Lam Research Corp. LRCX,
and KLA Corp. KLAC,
back in April. Applied Materials smells like gains, stock declines across the board

Brian Lowry

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