Applied Materials, Inc. (NASDAQ:AMAT) Reports Strong First Quarter, Disappoints On Guidance

Applied Materials, Inc. (NASDAQ:AMAT) reported first quarter revenue of $2.33 billion and a profit of 28 cents per share. Both numbers beat estimates and it got the company off to a strong start for 2015. The company showed strong growth for the early part of 2015. Margins were solid and sales brisk. Its Silicon Systems Group division brought in 61% of the total revenue but it was down 2.6% the same period a year ago. Its Applied Global Services division contributed 25% to the total and that was up 44% from a year ago. The display segment was up another 44% sequentially and the division benefited from strong display demand.

Analyst identify potential hold signals in AMAT.

Global Revenues

About 72%of the company’s revenue came from the Asia/Pacific region. Taiwan contributed the most at 22% with Korea right behind at 20%, then China and Japan. Korea had the strongest sequential growth coming in at 181%. Europe and the US were the laggards with Europe showing a decline of 19% and the US a decline of 16%. Overall sales were strong but outside of Asia and the Pacific they were very weak.

Applied Materials, Inc. (NASDAQ:AMAT) lowered guidance for the second quarter as it sees softness in the chip making machinery sector.

Merger Preparations

In anticipation of the pending merger with Tokyo Electron, Applied Materials, Inc. (NASDAQ:AMAT) gave its CEO a raise. This is to help elevate his tax burden as the overseas merger approaches. The raise was $12 million in cash tied to performance goals. Once the merger happens the company will be incorporated in the Netherlands. The board is doing this to avoid punishing its executives as the tax rules change. The $12 million will be paid in three installments.


The stock is trading sideways in a fairly tight range and that looks to continue. Momentum is neutral and leaning slightly downward. The stock has support at this level but it is not very strong. If the stock makes a move upward it will have to be powered by high volume.

Culver Stinson

Culver Stinson

Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.