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Applied Materials Shares Tumble After 2Q

The Associated Press

NEW YORK (AP) — Shares of Applied Materials Inc. slid in morning trading Wednesday as analysts raised concerns about the company's solar cell business following fiscal second-quarter results.

The Santa Clara, Calif. company, which also provides chip manufacturing equipment, posted a loss of $255.4 million on Tuesday for the quarter ended April 26.

With demand weak, revenue tumbled 53 percent to $1.02 billion, though not as far as analysts expected.

The company told analysts in a conference call late Tuesday that it had cut 1,600 employees and 300 temporary workers by the end of the quarter and plans to bring the total reduction to 2,300 by the end of the fiscal year.

Looking ahead, Applied Materials forecast a loss of 6 cents to 14 cents per share in the fiscal third quarter.

The company expects sales to remain flat or fall as much as 15 percent from the quarter before, implying sales of $867 million to $1.02 billion.

Analysts polled by Thomson Reuters were looking for a loss of 7 cents per share on sales of $931.2 million.

Several analyst pointed to the solar business as a point of particular concern.

Stifel Nicolaus analyst Patrick Ho told clients in a note Wednesday, "We believe we are now seeing the 'other shoe drop'" for the solar unit.

"While weakness began exhibiting itself in the previous quarter, we believe that conditions have worsened more than we initially thought and this could linger for the near term, until the financing market improves," he said.

Ho nevertheless reiterated a "Buy" rating on shares, saying he remains "favorably disposed to the company's long term prospects," including the solar business.

Mehdi Hosseini, an analyst with FBR Capital Markets, said solar customers have not yet responded to falling prices, leading to weak demand for Applied Materials and others.

He said he expects several more quarters of the same, reiterating a "Market Perform" rating.

The company's shares tumbled 62 cents, or 5.5 percent, to $10.85 in morning trading.