Applied Materials 2Q forecast misses on weak chip demand

Chip gear maker Applied Materials Inc forecast second-quarter profit and revenue below analysts' estimates, underscoring the weakness in the semiconductor industry that has forced some companies to temper their outlook.

Applied Materials said it expects current- quarter adjusted earnings between 62 and 70 cents per share and net sales in a range of $3.33 billion to $3.63 billion.

Analysts on average had expected the company to earn 76 cents per share on sales of $3.66 billion, according to IBES data from Refinitiv.

Investors are worried about a slowing smartphone market, especially in China, and its impact on chip demand. Both Apple Inc and Samsung Electronics Co Ltd have been hit by the U.S.China trade dispute and a slowing Chinese economy.

"In the past quarter, there's been more negative than positive news with the whole industry facing challenges," Chief Executive Officer Gary Dickerson said on a post-earnings call.

Display equipment revenue in 2019 will decline by about a third from last year to record levels, Dickerson said.

Sales from its display business - which makes flat panel displays for televisions, PCs and smartphones - rose 14.4 percent to $507 million in the reported quarter.

Applied

Materials, whose results are seen as a bellwether for the chip industry, said sales in its semiconductor business which accounts for most of its revenue fell a fifth to $2.27 billion in the reported quarter, but came in above FactSet estimates of $2.25 billion.

The company's net income rose to $771 million, or 80 cents per share, in the first quarter ended Jan. 27, from $ 165 million, or 15 cents per share, a year earlier.

On an adjusted basis, the company earned 81 cents per share. Net sales fell 10.7 percent to $3.75 billion.

Analysts had expected the company to earn 79 cents per share on sales of $3.71 billion. The company's shares were down 1.6 percent at $40.07 in after-market trading.