Applied Materials Beats; Will Still Cut Jobs

Updated to include further detail from Applied Material's third-quarter earnings report

SANTA CLARA, Calif. (TheStreet) -- Applied Materials(AMAT Quote) surged past Wall Street targets with its quarterly results as demand improved for its microchip-fabrication equipment.

The company also made a call for 2010, saying that it now expects sales to rise by 30% next year, which would mean a top line of about $6.5 billion. The consensus Wall Street target for Applied Material's 2010 revenue currently calls for $6.2 billion.

And yet, amid all this seemingly good news, the company said it would pursue some aggressive cost-cutting in fiscal 2010, including layoffs next year of between 1,200 and 1,500 people. It expects to take charges, mostly in the first quarter, of $100 million to $125 million, to pay for severance and other costs. Applied Materials said the sackings will eventually save it $450 million.

After Wednesday's closing bell, Applied Materials reported fiscal fourth-quarter adjusted earnings of $177 million, or 13 cents a share, well beyond the 3 cents analysts were forecasting on a per-share basis.

Fourth-quarter net sales, meanwhile, came to $1.53 billion, also topping the consensus Wall Street target, which called for a top line of $1.32 billion. Still, the figure is down a sharp 25% from the $2.04 billion in sales it registered a year ago. Profit fell as well. A year ago, the company posted adjusted earnings of $264 million, or 20 cents a share.