A tech beating. 

Applied Materials Inc. (AMT) - Get Report shares fell sharply in pre-market trading Friday after the maker of equipment for semiconductor producers forecast softer-than-expected sales amid a slowdown in global smartphone demand.

Applied Materials topped Wall Street forecasts in its second quarter earnings late Thursday, posting a bottom line of $1.22 per share on record three-month revenue of $4.57 billion. However, the Santa Clara, Calif.-based group said current quarter semiconductor revenues should grow 7%, a figure the fell shy of Street forecasts, and said overall sales would come in between $4.33 billion and $4.53 billion.

"Smartphone sales have been below expectations, particularly for high-end models, and in response, both semiconductor and display suppliers have made adjustments to their capacity planning," CEO Gary Dickerson told investors on a conference call. "With inventory rebalance that we're seeing from smartphones, we're going to see a sequential dip in the Q3. But from our guidance into Q4, you can see that it recovers nicely into Q4."

Applied Materials shares were marked 4.45% lower in pre-market trading, indicating an opening bell price of $51.56 each, a move that would trim the stock's year-to-date gain to just 0.86%, well shy of the 9% advance for the Philadelphia Semiconductor Index benchmark.

The stock is also likely to be pressured by a prices cut from Deutsche Bank and Morgan Stanley, with the former lowering estimate to $65 from $70 and the latter trimming it $1 to $60. Keybanc, however, boosted its near-term target by $1 to $75

Applied Material's display business, however, was a bright spot for the group over its fiscal second quarter, with sales rising 53.5% to $600 million, well ahead of the $578 million consensus.

"In display, since 2012, we've grown revenues at an average rate of 25% per year and in 2018, we remain on track to grow by more than 30%," Dickerson said. "Based on recent revisions to timing of customers' OLED plans, our early view of 2019 is that our revenue will be lower than this year, although still nicely up from 2017."

"Overall, we maintain a positive outlook for the business as unique, long-term growth driver for Applied," he added.