Applied Materials Feels Flat-Panel Slowdown

Updated from 4:29 p.m. EST

Applied Materials'(AMAT Quote) profit surged 81% in its fiscal fourth quarter, but the results came up short of Wall Street expectations.

And in a subsequent conference the call with analysts, the world's No. 1 vendor of chipmaking equipment said its fiscal 2007 year would get off to a slow start.

CFO George Davis singled out flat-panel-display manufacturing as the prime culprit for the slowdown. According to Davis, orders from flat-panel makers will decline $200 million sequentially in the fiscal first quarter.

Meanwhile, orders for semiconductor-making equipment will be driven by memory makers, as logic vendors and contract chip manufacturers, or foundries, hold off on capital spending.

Even so, executives said they expect 2007 to be a year of positive growth, suggesting that the chip-equipment industry may be experiencing more of a hiccup than a full-fledged downturn.

The stock was off 2.1%, or 39 cents, at $18.26 in extended trading.

The company said sales for the three months ended Oct. 29 totaled $2.54 billion, down 1% sequentially, but up 47% from this time last year.

Applied posted $449 million in net income, or 30 cents a share, compared with $247 million in net income, or 15 cents a share, in the year-ago period.

The company was a penny shy of Wall Street earnings expectations, which called for EPS of 31 cents on sales of $2.55 billion.