Applied Materials 1Q 2012 Results Exceed Expectations

Applied Materials, Inc. reported results for its first quarter of fiscal 2012 ended Jan. 29, 2012. Applied generated orders of $2.01 billion and net sales of $2.19 billion. Non-GAAP operating income was $344 million, and non-GAAP net income was $240 million or 18 cents per share. GAAP operating income was $179 million, and GAAP net income was $117 million or 9 cents per share.

Applied completed the acquisition of Varian Semiconductor Equipment Associates, Inc. during the quarter, and the results include Varian’s operations for the full period.

“Global demand for mobile devices is driving a third consecutive year of strong capital investment by semiconductor customers,” said Mike Splinter, chairman and CEO. “As a result, we see solid order momentum and an improved outlook overall for our second quarter.”

“Applied delivered net sales and earnings above the high end of our expectations,” said George Davis, chief financial officer. “In a quarter in which we closed the Varian acquisition, we also returned substantial capital to our stockholders, paying $104 million in cash dividends and using $200 million to repurchase over 18 million shares of our common stock.”

During the quarter, Varian generated orders of approximately $270 million and net sales of approximately $200 million, which were reported within the Silicon Systems Group (SSG) and the Applied Global Services (AGS) segments.

Silicon Systems Group orders were $1.42 billion, up 53% reflecting increased demand in foundry and the addition of Varian’s business. Net sales were $1.34 billion, up 26%. New order composition was foundry 57%, logic and other 14%, flash 19%, and DRAM 10%.

Applied Global Services orders were $517 million, down 8%. Net sales were $534 million, down 15%, in line with the company’s expectations. AGS orders and net sales reflected lower wafer starts, partially offset by the addition of Varian’s business; net sales also reflected lower thin film solar volumes. Display orders were $40 million, reflecting ongoing weakness in LCD TV equipment demand. Net sales were $104 million, down 39%. Energy and Environmental Solutions (EES) orders were $33 million, down 62%, reflecting solar industry overcapacity. Net sales were $207 million, down 34%.

For the second quarter of fiscal 2012, Applied expects net sales to be up 5% to 15% sequentially.