Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Monday, July 17, 2006

Widely Traded 48 Hour Clock:Applied Materials Gets Good News

After a year of being hammered in the market, Applied Materials, the marker of integrated circuit fabrication equipment, may be getting a break. At $15.40, the company is very near its 52-week low, down from a peak of $21.06. recently reported that companies like Applied Micro are making public statements that they believe that the demand from companies like Samsung and Hynix Semi will continue to rise.

Reuters reported last week that global chip making equipment posted its largest year-over-year gain in May, up 20% to $2.4 for companies that make tools for manufacturing microchips.

At a meeting at Semicon West, that big chip trade show, Applied Material's CEO told analysts that the total market for products from companies like AMAT would be $37 billion in 2006 in contrast to a mere $17 billion in 2004.

The rosy outlook has not shown up in the company's financials yet, and that is undoubtedly what is holding the stock near its low. Although revenue was up 21% in the last quarter (April 30), AMAT only guided for a 5% to 10% increase of the current quarter.

New orders in the April quarter were up 60% over the same quarter a year ago, hitting $2.49 billion. So, either the guidance is right, or the more recent big talk about the improving dynamics of the industry will trump the mediocre forecast.

If Applied Materials beat the consensus by walking the walk, it won't stay at $15 for long.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

Powered by Blogger