) -- Investors bid up shares of

Applied Materials

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Wednesday on better-than-expected quarterly results and some sanguine remarks by the company's boss during a conference call.

Applied Materials stock was changing hands midday Wednesday at $13.87, up 65 cents, or nearly 5%. Volume reached 17 million shares; daily turnover of the stock averages 20 million.

After the closing bell Tuesday, the big maker of semiconductor-fabricating equipment said it broke even in its fiscal third quarter (excluding items), far better than the 8-cent loss that Wall Street was expecting. The company attributed the results to that recession-era catch-all: aggressive cost cutting.

Year-over-year comparisons remain difficult, however: the company's loss of $55 million, or 4 cents a share, which includes items, is down from a profit of $228 million, or 17 cents a share, a year ago. Revenue fell 39% to $1.13 billion.

But business is evidently looking up in the notoriously boom-bust microchip sector. Applied Material's chief executive, Mike Splinter, told analysts and investors in the company's quarterly conference call that demand was increasing "for the first time in a long time" and that the economic slowdown in three big markets, the U.S., Japan and Europe, "appears to be moderating."

As it happens, there was some numerical proof for those statements: The company said it inked new orders during the third quarter worth $1.07 billion, up from about $650 million in its second quarter. Some 25% of that fresh business came out of China and Southeast Asia, Applied said.

Applied executives also ratcheted up the company's guidance for the fourth quarter, saying revenue would grow 10% to 20% sequentially, hitting somewhere between $1.25 billion to $1.36 billion. The company said it expects to break even on its bottom line, or post a profit up to 4 cents a share.

The revised outlook surpasses Wall Street forecasts: analysts were, on average, looking for a loss of 5 cents a share on revenue of $1.06 billion.

Shares of other chip-equipment companies appeared to benefit, if slightly, from the Applied Materials news.


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stock gained 68 cents, or 2.3%, to $30.96;

Novellus Systems


rose 16 cents, or 1%, to $17.68; and


(TER) - Get Report

added 23 cents, or 3%, to $7.87.

-- Written by Scott Eden in New York

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