Applied Materials' profit jumps sharply

Applied Materials Inc., the world’s largest supplier of semiconductor manufacturing tools, Tuesday reported a higher quarterly profit, but said current business conditions remained challenging as the chip industry prepares for a slowdown.

Earnings in the quarter were $288.8 million, or 17 cents a share, compared to a year-earlier profit of $82.4 million, or 5 cents a share. Sales rose to $1.78 billion from $1.56 billion in the same period last year. Both earnings and sales were just ahead of analysts’ expectations.

New orders, an indicator of future revenue, fell 36 percent quarter-over-quarter, slightly weaker than the company’s target of a 35 percent drop.

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“This is probably the worst quarter they’ve had in a long time,” said Suresh Balaraman, an analyst with ThinkEquity Partners. “I think in terms of bookings, their sequential decline is probably worse than many of their peers.”

Analysts on average were expecting earnings in the fiscal first quarter, which ended Jan. 30, of 16 cents a share and sales of $1.74 billion.

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The company was set to give its financial outlook on a call to begin at 4:30 p.m. EST. Merrill Lynch analyst Brett Hodess said he expects Applied Materials to forecast orders to be flat or fall as much as 10 percent from the first quarter.

The Santa Clara, California-based company may also face pressure on the call to declare its position on paying a dividend, a day after rival KLA-Tencor Corp. said it would begin to pay a dividend of about $100 million a year.

Michael Splinter, the chief executive of Applied Materials, told Reuters last year he was not inclined to pay a dividend, though Wall Street appears interested in having the company reconsider that position. In a research note Tuesday, Jefferies & Co. analyst Cristina Osmena wrote a report entitled ”Mr. Splinter, Where is Our Dividend??”