SANTA CLARA (dpa-AFX) - Chip-equipment maker Applied Materials Inc. (AMAT) posted yet another quarter of weak earnings that missed Wall Street estimates, on pallid demand amid tough market conditions, and lower operating margins. The company provided some soft guidance for the fourth quarter.
Applied Materials indicated replacing its decade-long Chief Executive Michael Splinter and named Gary Dickerson as successor, effective September 1. Splinter will assume the position of executive chairman.
Shares of the company slid 3 percent in after-hours trade on the Nasdaq, after having dropped 2.5 percent at the close of markets.
One of the largest equipment supplier to the chip making industry, Applied Materials has been grappling with weak demand from chip makers as demand for devices like computers and desktops lose momentum.
Applied Materials, based in Santa Clara, California, posted quarterly net earnings of $168 million or $0.14 a share, compared with $218 million or $0.17 a share last year.
Excluding items, adjusted earnings for the quarter were $223 million or $0.18 a share, compared with $300 million or $0.24 a share in the prior year.
On average, 15 analysts polled by Thomson Reuters estimated earnings of $0.19 a share for the quarter. Analysts' estimates typically exclude special items.
Sales for the quarter were lower at $1.98 billion, compared with $2.34 billion a year ago. Fourteen analysts had consensus sales estimate of $2.06 billion.
By segment, Silicon Systems Group sales fell to $1.27 billion from $1.55 billion last year, and Applied Global Services sales to $497 million from $579 million.
Display sales grew by $19 million to $161 million. 'Consumers' appetite for mobile devices and larger TVs is driving healthy demand for our semiconductor and display equipment,' said Splinter.
Sales were weak across the US, Europe, Japan, Korea, and Taiwan.
Adjusted operating margin for the quarter receded to 15.8 percent from 18.4 percent last year. The company's research expense was higher by $25 million, reflecting its focus on precision materials engineering.
For the fourth quarter, the company expects adjusted earnings of $0.16 to $0.20 a share, with sales flat on a sequential basis. Analysts expected earnings of $0.21 per share on sales of $2.14 billion.
Meanwhile, Gary Dickerson will assume the position of CEO and will continue to hold his current role as president. Dickerson also was elected as a member of the board.
Dickerson served for seven years as CEO of Varian Semiconductor Equipment Associates, Inc. until its acquisition by Applied Materials in 2011 and spent 18 years at KLA-Tencor Corp. where he held a variety of operations and product development roles.
The company's stock closed Thursday at $15.32, down $0.40 or 2.57%, on a volume of about 10 million shares. In after hours, the stock dropped $0.51 or 3.30%.
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