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Dykstra: A Sunny View on AMAT's Calls

Applied Materials (AMAT) is well known for creating the machinery that helps chipmakers manufacture smaller, smarter and less expensive microchips.

Today's micro-circuits are measured in nanometers (nm), or billionths of a meter, and around the globe, every day, equipment made by Applied is etching out transistors that are smaller across than light waves, approximately 65nm and even smaller in size. The company's plasma etching systems carve out material less than 30nm wide and can remove single-nanometer layers of material. Its equipment can deposit single atoms of copper, measuring a mere 5nm thick; it's done with high-volume, cost-effective machinery that yields reliable, low-cost products.

Applied also manufactures equipment to produce flat-panel and liquid crystal displays, with customers such as Sony (SNE) and Samsung contributing to AMAT's $9.87 billion in sales.

Another glimmer of light for Applied is solar power. Although solar is still a very small part of Applied Materials' nearly $10 billion annual revenue, the emerging category is growing fast, and recently Applied Materials won the "Susanne Wilson Award for Pollution Prevention/Resources Conservation: Special Project" for its energy-efficient semiconductor equipment design program.

So far this year, Applied Materials has booked $300 million in orders for solar equipment that uses its nanotechnology to create more efficient and affordable solar panels. Previously, the company had forecast solar-panel gear sales of $200 million for the fiscal year that will end in October; now it says sales could hit $400 million.

Now, on to the financial strengths of the company.

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