Applied Materials’ financial results “exceed expectations”

The company reports that orders of USD$3.03 billion in the fourth quarter were generated, which helped to boost full year orders by an impressive 150 percent in comparison to the previous year, to reach USD$10.25 billion. This is an 11 percent increase on the third quarter of the year and was led by solar and semiconductor equipment.

Net sales grew by 15 percent in comparison to the third quarter of the year, to reach $2.89 billion in the fourth quarter, and $9.55 billion for the whole financial year. Operating profit and net income reaped $699 million and $468 million respectively in the last quarter, while the figures rose to $1.38 billion and $938 million respectively for the full year.

In terms of the company’s different segments, Silicon Systems Group (SSG) orders were $1.67 billion in the fourth quarter, up nine percent from the third quarter, led by higher demand for inspection equipment. Net sales increased to $1.48 billion, up two percent, led by record net sales of chemical mechanical polishing (CMP) systems. Operating income rose to $564 million or 38 percent of net sales.

For the full year, SSG orders more than tripled to $5.76 billion, net sales more than doubled to $5.30 billion, and operating income rose to $1.89 billion or 36 percent of net sales.

Applied Global Services’ (AGS) orders reached $631 million in the fourth quarter, up six percent from the third quarter. Net sales increased to $516 million, up 10 percent from the third quarter, driven by 200 mm equipment shipments. Operating income increased to $100 million or 19 percent of net sales.

For the year, AGS’ orders increased by 85 percent to $2.18 billion, net sales increased by 34 percent to $1.86 billion, and operating income rose to $337 million or 18 percent of net sales.

Representing a slight decline, Display’s orders decreased 27 percent from the third quarter to $175 million, reflecting lower demand. Net sales were $281 million, up 30 percent from the third quarter, driven by the fulfillment of orders placed in previous quarters, and operating income increased to $89 million or 32 percent of net sales.

However, for the year, Display’s orders more than doubled to $799 million, net sales increased by 79 percent to $899 million, and operating income rose to $267 million or 30 percent of net sales.

Energy and Environmental Solutions (EES) experienced record orders of $546 million in the fourth quarter, up 55 percent from the third quarter, driven by demand for Baccini cell processing systems and PWS wafering systems. Net sales increased to $606 million, led by record net sales of Baccini and PWS systems, and included the sign-off of two SunFab(TM) thin film lines in China. EES had operating income of $86 million or 14 percent of net sales.

For the year, EES orders increased by 58 percent to $1.51 billion, net sales increased by 28 percent to $1.48 billion, and the operating loss increased to $466 million or 31 percent of net sales, primarily due to restructuring, asset impairment and inventory-related charges of $486 million, recognized in the second and third quarters of fiscal 2010.

"Applied ended a very strong year by delivering results that exceeded our expectations in the fourth quarter," said Mike Splinter, chairman and chief executive officer. "We are seeing strong momentum in our business as we enter 2011, fueled by accelerated innovation and market share gains."

"In 2010, Applied generated $1.7 billion in cash from operations after investing more than $1.1 billion in research and development," added George Davis, chief financial officer. "We also bought back $350 million in shares, increased our dividend by 17 percent, and ended the year with $3.9 billion in cash and investments."

For the first quarter of fiscal 2011, Applied says it expects net sales to be down in the range of eight percent to 15 percent quarter over quarter. The company also forecasts non-GAAP EPS to be in the range of $0.30 to $0.34, which excludes known charges related to completed acquisitions of approximately $0.01 per share.