AMAT » Topics » Overview

This excerpt taken from the AMAT 10-Q filed Mar 3, 2009.
Overview
 
Applied provides Nanomanufacturing Technologytm solutions for the global semiconductor, flat panel display, solar and related industries, with a broad portfolio of innovative equipment, service and software products. Applied’s customers are primarily manufacturers of semiconductors, flat panel liquid crystal displays (LCDs), solar photovoltaic cells and modules (solar PVs), flexible electronics and energy-efficient glass. Applied operates in four reportable segments: Silicon, Applied Global Services, Display, and Energy and Environmental Solutions. Product development and manufacturing activities occur primarily in North America, Europe, Israel and Asia. Applied’s broad range of equipment and service products are highly technical and are sold primarily through a direct sales force.
 
Applied’s results are driven primarily by worldwide demand for semiconductors, which in turn depends on end-user demand for electronic products. Each of Applied’s businesses is subject to cyclical industry conditions, as demand for manufacturing equipment and services can change depending on supply and demand for chips, LCDs, solar PVs and other electronic devices, as well as other factors, such as global economic and market conditions, and technological advances in fabrication processes.
 
Applied incurred a net loss for the first quarter of fiscal 2009 and expects an unusually challenging environment for the remainder of fiscal 2009. The turmoil in the financial markets and weakening global economy are compounding the impact of the highly cyclical markets in which Applied operates. Negative trends in consumer spending and pervasive economic uncertainty have led some customers to significantly reduce factory operations and to reassess their projected spending plans. Due to poor economic conditions and difficulties in obtaining financing during the global credit crisis, customers may continue to reduce demand, which in turn will affect Applied’s future operating results. In this uncertain macroeconomic and industry climate, the ability to forecast customer demand and Applied’s future performance is extremely limited. Applied currently expects that orders and revenue will be down overall in fiscal 2009.


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The following table presents certain significant measurements for the three months ended January 25, 2009 and January 27, 2008:
 
                         
    Three Months Ended        
    January 25,
    January 27,
       
    2009     2008     Change  
    (In millions, except per share amounts and percentages)  
 
New orders
  $ 903     $ 2,500       (64 )%
Net sales
  $ 1,333     $ 2,087       (36 )%
Gross margin
  $ 392     $ 935       (58 )%
Gross margin percent
    29.4 %     44.8 %     (15 points )
Net income (loss)
  $ (133 )   $ 262       (151 )%
Earnings (loss) per share
  $ (0.10 )   $ 0.19       (153 %)
 
Financial results for the first quarter of fiscal 2009 reflected significantly reduced demand for manufacturing equipment and services due to unfavorable global economic and industry conditions, and also included restructuring charges of $133 million associated with the cost reduction program announced on November 12, 2008. Total orders decreased significantly from the first quarter of fiscal 2008, primarily due to deteriorating demand for semiconductor and display products and services. Net sales decreased during the first quarter of fiscal 2009 as compared to the first quarter of fiscal 2008, due primarily to a decrease in demand from semiconductor equipment and spares customers, partially offset by increased sales of solar manufacturing products. The net loss for the first quarter of fiscal 2009 reflected lower net sales and included the restructuring charges noted above.
 
This excerpt taken from the AMAT 10-K filed Dec 12, 2008.
Overview
 
Applied provides Nanomanufacturing Technologytm solutions for the global semiconductor, flat panel display, solar and related industries, with a broad portfolio of innovative equipment, service and software products. Applied’s customers are primarily manufacturers of semiconductors, flat panel liquid crystal displays (LCDs), solar photovoltaic cells and modules (solar PVs), flexible electronics and energy-efficient glass. Applied operates in four reportable segments: Silicon, Applied Global Services, Display, and Energy and Environmental Solutions. Product development and manufacturing activities occur primarily in North America, Europe, Israel and Asia. Applied’s broad range of equipment and service products are highly technical and are sold primarily through a direct sales force.
 
Applied’s results are driven primarily by worldwide demand for semiconductors, which in turn depends on end-user demand for electronic products. Each of Applied’s businesses is subject to cyclical industry conditions, as demand for manufacturing equipment and services can change depending on supply and demand for chips, LCDs, solar PVs and other electronic devices, as well as other factors, such as global economic and market conditions and technological advances in fabrication processes.
 
The following table presents certain significant measurements for the past three fiscal years:
 
                         
Fiscal Year
  2008     2007     2006  
    (In millions, except per share amounts and percentages)  
 
New orders
  $ 9,155     $ 9,677     $ 9,888  
Net sales
  $ 8,129     $ 9,735     $ 9,167  
Gross margin
  $ 3,443     $ 4,492     $ 4,292  
Gross margin percent
    42.4 %     46.1 %     46.8 %
Net income
  $ 961     $ 1,710     $ 1,517  
Earnings per share
  $ 0.70     $ 1.20     $ 0.97  
 
Fiscal 2008 financial results reflected decreased demand for semiconductor equipment and, to a lesser extent, service products, due to unfavorable market conditions in the semiconductor industry, partially offset by increased demand for LCD and solar products. New orders decreased from fiscal 2007 due to lower demand for semiconductor equipment from memory, foundry and logic chip manufacturers, partially offset by increased demand by LCD customers and, beginning in the first quarter of fiscal 2008, the recognition of orders for Applied’s SunFabtm Thin Film Line for manufacturing solar panels. Net sales decreased during fiscal 2008 compared to fiscal 2007 due to the decline in investment from memory and logic customers, partially offset by increased sales of crystalline silicon (c-Si) solar manufacturing products. Net income decreased in fiscal 2008 compared to fiscal 2007 due to lower net sales, offset in part by lower operating expenses. Fiscal 2008 financial results included charges associated with restructuring programs.


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Fiscal 2007 financial results reflected improved conditions in the semiconductor industry that began with the industry’s recovery in 2006, while conditions in the display industry were mixed as manufacturers postponed capacity additions despite strong consumer demand for LCD TVs. Total orders decreased slightly from fiscal 2006, primarily due to the significant decline in demand for display manufacturing products, partially offset by increased demand for products and services in all other segments. Net sales increased during fiscal 2007 over fiscal 2006, primarily due to strong demand from dynamic random access memory (DRAM) and flash memory chip manufacturers, partially offset by a significant decline in LCD equipment sales as manufacturers absorbed capacity following substantial investment in 2006. Net income improved in fiscal 2007 compared to fiscal 2006 due to higher sales and lower operating expenses, offset in part by lower interest income. Fiscal 2007 financial results included restructuring and asset impairment and other charges associated with ceasing development of beamline implant products, and an in-process research and development (IPR&D) expense associated with the acquisition of certain net assets of Brooks Automation, Inc. (Brooks Software).
 
Fiscal 2006 results reflected a recovery in the semiconductor and flat panel display industries along with the global economy, as end-user demand for electronic products and LCDs drove increased customer investments in advanced silicon (particularly memory) and display products compared to fiscal 2005. During this period, Applied’s semiconductor customers increased both high-volume production and leading-edge 65nm and 45nm chip development. Improvements in operating performance were offset in part by restructuring and asset impairment charges, and an IPR&D expense associated with the acquisition of Applied Films Corporation (Applied Films).
 
Applied expects an unusually challenging environment for fiscal 2009. The turmoil in the financial markets and weakening global economy are compounding the impact of the highly cyclical markets in which Applied operates. Current negative trends in consumer spending and pervasive economic uncertainty have led some customers to decrease factory operations and to reassess their projected spending plans. As a result, on November 12, 2008, Applied announced that it will implement a restructuring program beginning in the first quarter of fiscal 2009. In addition, Applied’s ability to forecast customers’ future investments and its financial targets are limited in this uncertain macroeconomic climate. Applied currently expects that orders and revenue will be down overall and across most segments in fiscal 2009, with the exception of the Energy and Environmental Solutions segment.
 
This excerpt taken from the AMAT 10-Q filed Aug 29, 2008.
Overview
 
Applied provides Nanomanufacturing Technologytm solutions for the global semiconductor, flat panel display, solar and related industries, with a broad portfolio of innovative equipment, service and software products. Applied’s customers are primarily manufacturers of semiconductors, liquid crystal displays (LCDs), solar photovoltaic cells and modules (solar PVs), flexible electronics and energy-efficient glass. Applied operates in four reportable segments: Silicon, Applied Global Services, Display, and Energy and Environmental Solutions. Product development and manufacturing activities occur primarily in North America, Europe, Israel and Asia. Applied’s broad range of equipment and service products are highly technical and are sold primarily through a direct sales force.
 
Applied’s results are driven primarily by worldwide demand for semiconductors, which in turn depends on end-user demand for electronic products. Each of Applied’s businesses is subject to cyclical industry conditions, as demand for manufacturing equipment and services can change depending on supply and demand for chips, LCDs, solar PVs and other electronic devices, as well as other factors, such as global economic and market conditions and technological advances in fabrication processes.
 
New orders decreased by 11 percent for the third quarter of fiscal 2008 compared to the third quarter of fiscal 2007, and by 7 percent for the first nine months of fiscal 2008 compared to the corresponding period in fiscal 2007. Net sales decreased by 28 percent for the third quarter of fiscal 2008 compared to the third quarter of fiscal 2007, and by 17 percent for the first nine months of fiscal 2008 compared to the corresponding period in fiscal 2007. The decreases in new orders and net sales for both periods were primarily due to lower orders and sales of semiconductor equipment, offset in part by increased orders and sales of LCD and solar equipment. Net income for the third quarter of fiscal 2008 declined 65 percent compared to the same period in the prior year. Net income for the first nine months of fiscal 2008 decreased 43 percent compared to the same period in the prior year. The decline in net income for both periods was primarily due to lower net sales while operating expenses remained essentially flat. Fiscal 2008 year-to-date results included restructuring charges associated with a global cost reduction plan initiated in January 2008. During the first nine months of fiscal 2008, Applied generated operating cash flow of $1.6 billion and repurchased 64 million shares of its common stock for $1.2 billion.


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This excerpt taken from the AMAT 10-Q filed Jun 4, 2008.
Overview
 
Applied provides Nanomanufacturing Technologytm solutions for the global semiconductor, flat panel display, solar and related industries, with a broad portfolio of innovative equipment, service and software products. Applied’s customers include manufacturers of semiconductor chips and wafers, liquid crystal displays (LCDs), solar photovoltaic cells and modules (PVs), flexible electronics and energy-efficient glass. Applied reports four segments: Silicon, Applied Global Services, Display, and Energy and Environmental Solutions. Product development and manufacturing activities occur in North America, Europe, Israel and Asia. Applied’s broad range of equipment and service products are highly technical and are sold primarily through a direct sales force.
 
Applied’s results are driven primarily by worldwide demand for semiconductor chips, which in turn depends on end-user demand for electronic products. Applied’s business is subject to cyclical industry conditions, as demand for manufacturing equipment and services can change depending on supply and demand for chips, LCDs, PVs and other electronic devices, as well as other factors, such as global economic conditions and technological advances in fabrication processes.
 
The following table presents certain significant measurements for the three and six months ended April 27, 2008 and April 29, 2007:
 
                                                 
    Three Months Ended           Six Months Ended        
    April 27,
    April 29,
          April 27,
    April 29,
       
    2008     2007     % Change     2008     2007     % Change  
    (In millions, except per share
    (In millions, except per share
 
    amounts and percentages)     amounts and percentages)  
 
New orders
  $ 2,414     $ 2,648       (9 )%   $ 4,914     $ 5,187       (5 )%
Net sales
  $ 2,150     $ 2,530       (15 )%   $ 4,237     $ 4,807       (12 )%
Gross margin
  $ 967     $ 1,137       (15 )%   $ 1,902     $ 2,199       (14 )%
Gross margin percent
    45.0 %     44.9 %           44.9 %     45.8 %     1 %
Net income
  $ 303     $ 411       (27 )%   $ 565     $ 815       (31 )%
Earnings per diluted share
  $ 0.22     $ 0.29       (25 )%   $ 0.41     $ 0.58       (29 )%
 
Orders for the first six months of fiscal 2008 declined over the corresponding period in fiscal 2007 due to slowing worldwide demand for semiconductor equipment, partially offset by increased orders for display and solar products. Net sales decreased during the first six months of fiscal 2008 primarily due to lower equipment sales to semiconductor manufacturers and a slight decrease in equipment sales to display manufacturers. The reduction in net sales for silicon and display equipment was partially offset by increased sales of solar equipment and slightly


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increased services sales. Orders and net sales declined for the second quarter of fiscal 2008 compared to the prior year period reflecting the weakness in demand for semiconductor equipment with increased spending by customers for products in all other areas of the business.
 
Net income for the first six months of fiscal 2008 decreased compared to the same period in the prior year due to lower net sales and higher operating expenses. The increase in operating expenses was principally due to restructuring and asset impairment charges and increased spending in other operating expense categories, as Applied expanded its solar operations while continuing to focus on operating efficiency and cost controls. Fiscal 2008 results included restructuring charges associated with a global cost reduction plan initiated in the first fiscal quarter of 2008. Net income for the second quarter of fiscal 2008 declined compared to the same period in the prior year due to lower net sales and increased operating expenses, partially offset by savings from a continued focus on operating efficiency and prudent cost controls.
 
This excerpt taken from the AMAT 10-Q filed Mar 3, 2008.
Overview
 
Applied provides Nanomanufacturing Technologytm solutions for the global semiconductor, flat panel display, solar and related industries, with a broad portfolio of innovative equipment, service and software products. Applied’s customers include manufacturers of semiconductor chips and wafers, liquid crystal displays (LCDs), solar photovoltaic cells and modules (PVs), flexible electronics and energy-efficient glass. Applied reports four segments: Silicon, Applied Global Services, Display, and Energy and Environmental Solutions. Product development and manufacturing activities occur in North America, Europe, Israel and Asia. Applied’s broad range of equipment and service products are highly technical and are sold primarily through a direct sales force.
 
Applied’s results are driven primarily by worldwide demand for integrated circuits, which in turn depends on end-user demand for electronic products. Applied’s business is subject to cyclical industry conditions, as demand for manufacturing equipment and services can change depending on supply and demand for chips, LCDs, PVs and other electronic devices, as well as other factors, such as global economic conditions and technological advances in fabrication processes.
 
The following table presents certain significant measurements for the three months ended January 27, 2008 and January 28, 2007:
 
                         
    Three Months Ended        
    January 27,
    January 28,
       
    2008     2007     % Change  
    (In millions, except per share
 
    amounts and percentages)  
 
New orders
  $ 2,500     $ 2,538       (2 )%
Net sales
  $ 2,087     $ 2,277       (8 )%
Gross margin
  $ 935     $ 1,063       (12 )%
Gross margin percent
    44.8 %     46.7 %     (2 )%
Net income
  $ 262     $ 403       (35 )%
Earnings per share
  $ 0.19     $ 0.29       (34 )%
 
Financial results for the first quarter of fiscal 2008 reflected slowing worldwide demand for semiconductor equipment and services, while demand for display and solar products increased. Total orders decreased slightly from the first quarter of fiscal 2007, primarily due to the decline in demand for semiconductor manufacturing and service products, partially offset by increased demand for display and solar equipment. Net sales decreased during the first quarter of fiscal 2008 over the first fiscal quarter of 2007, primarily due to a decrease in demand from DRAM and Flash memory chip manufacturers, as well as decreased LCD equipment sales, reflecting lower LCD


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equipment orders in fiscal 2007. Net income declined in the first quarter of fiscal 2008 compared to the first quarter of fiscal 2007 due to lower sales and net interest income, while operating expenses remained flat. First quarter of fiscal 2008 financial results included restructuring charges.
 
This excerpt taken from the AMAT 10-K filed Dec 14, 2007.
Overview
 
Applied provides Nanomanufacturing Technology solutions for the global semiconductor, flat panel display, solar and related industries, with a broad portfolio of innovative equipment, service and software products. Applied’s customers include manufacturers of semiconductor chips and wafers, liquid crystal displays (LCDs), solar photovoltaic (PV) cells, flexible electronics and energy-efficient glass. Applied reports four segments: Silicon, Fab Solutions, Display, and Adjacent Technologies. Product development and manufacturing activities occur in North America, Europe, Israel and Asia. Applied’s broad range of equipment and service products are highly technical and are sold through a direct sales force.
 
As a supplier to these industries, Applied’s results are driven primarily by worldwide demand for integrated circuits, which in turn depends on end-user demand for electronic products. Applied’s business is subject to cyclical industry conditions, as demand for manufacturing equipment and services can change depending on supply and demand for chips, LCDs and other electronic devices, as well as other factors, such as global economic conditions and technological advances in fabrication processes.
 
The following table presents certain significant measurements for the past three fiscal years:
 
                         
Fiscal Year
  2005     2006     2007  
    (In millions, except per share amounts and percentages)  
 
New orders
  $ 6,389     $ 9,888     $ 9,677  
Net sales
  $ 6,992     $ 9,167     $ 9,735  
Gross margin
  $ 3,086     $ 4,292     $ 4,492  
Gross margin percent
    44.1 %     46.8 %     46.1 %
Net income
  $ 1,210     $ 1,517     $ 1,710  
Earnings per share
  $ 0.73     $ 0.97     $ 1.20  
 
Fiscal 2007 financial results reflected improved conditions in the semiconductor industry that began with the industry’s recovery in 2006, while conditions in the display industry were mixed as manufacturers postponed capacity additions despite strong consumer demand for LCD TVs. Total orders decreased slightly from fiscal 2006, primarily due to the significant decline in demand for display manufacturing products, partially offset by increased demand for products and services in all other segments. Net sales increased during fiscal 2007 over fiscal 2006, primarily due to strong demand from DRAM and Flash memory chip manufacturers, partially offset by a significant decline in LCD equipment sales as manufacturers absorbed capacity following substantial growth in 2006. Net income improved in fiscal 2007 compared to fiscal 2006 due to higher sales and lower operating expenses, offset in


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part by lower interest income. Fiscal 2007 financial results included equity-based compensation expenses, restructuring and asset impairment and other charges associated with ceasing development of beamline implant products, and an in-process research and development (IPR&D) expense associated with the acquisition of certain net assets of Brooks Automation, Inc. (Brooks Software).
 
In fiscal 2006, customer demand improved over fiscal 2005, resulting in higher orders and revenue. Fiscal 2006 results reflected a recovery in the semiconductor and flat panel display industries and the global economy, as end-user demand for electronic products and LCDs drove increased customer investments in advanced silicon (particularly memory) and display products. During this period, Applied’s semiconductor customers increased both high-volume production and leading-edge 65nm and 45nm chip development. Improvements in operating performance were offset in part by restructuring and asset impairment charges associated with real estate and facilities disinvestment, equity-based compensation expenses, and an IPR&D expense associated with the acquisition of Applied Films Corporation (Applied Films).
 
Fiscal 2005 financial results reflected a challenging environment as Applied’s customers decreased fab utilization globally and reduced or delayed capital expenditures as a result of excess inventories and slowing demand for chips. In this period, Applied focused on lowering costs, improving efficiencies, reducing cycle time and bringing new products to market.
 
Applied expects a challenging environment for the first part of fiscal 2008. Uncertain economic conditions, including higher energy prices, credit concerns and changes in consumer confidence, have led to reduced demand in the semiconductor equipment industry. As a result, semiconductor equipment customers are expected to invest at levels lower than in 2007, offset in part by the anticipated onset of a recovery in the flat panel display industry and growth in other markets.
 
This excerpt taken from the AMAT 10-Q filed Aug 30, 2007.
Overview
 
Applied provides nanomanufacturing technologytm solutions for the global semiconductor, liquid crystal display (LCD), solar and related industries, with a broad portfolio of innovative equipment, service and software products. Applied’s customers include manufacturers of semiconductor chips and wafers, LCDs, solar photovoltaic (PV) cells, flexible electronics and energy-efficient glass. Applied operates in four reportable segments: Silicon, Fab Solutions, Display, and Adjacent Technologies. Product development and manufacturing activities occur in North America, Europe, Israel and Asia. Applied’s broad range of equipment and service products are highly technical and are sold through a direct sales force.
 
As a supplier to the semiconductor and semiconductor-related industries, Applied’s results are driven by worldwide demand for integrated circuits, which in turn depends on end-user demand for electronic products. Applied’s business is subject to cyclical industry conditions as demand for manufacturing equipment and services can change depending on supply and demand for chips, LCD’s and other electronic devices as well as other factors, such as technological advances in fabrication processes.
 
The following table presents certain significant measurements for the three and nine months ended July 30, 2006 and July 29, 2007:
 
                                                 
    Three Months Ended           Nine Months Ended        
    July 30,
    July 29,
          July 30,
    July 29,
       
    2006     2007     % Change     2006     2007     % Change  
    (In millions, except per share amounts and percentages)           (In millions, except per share amounts and percentages)        
 
New orders
  $ 2,670     $ 2,284       (14 )%   $ 7,199     $ 7,471       4 %
Net sales
  $ 2,543     $ 2,561       1 %   $ 6,649     $ 7,368       11 %
Gross margin
  $ 1,223     $ 1,216       (1 )%   $ 3,106     $ 3,416       10 %
Gross margin percent
    48.1 %     47.5 %     (1 )%     46.7 %     46.4 %     (1 )%
Net income
  $ 512     $ 474       (8 )%   $ 1,068     $ 1,288       21 %
Earnings per diluted share
  $ 0.33     $ 0.34       3 %   $ 0.67     $ 0.91       35 %
 
Results for the first nine months of fiscal 2007 reflected improved conditions in the semiconductor industry that began with the industry’s recovery in 2006. During this period conditions in the display industry were mixed as manufacturers postponed capacity additions despite strong consumer demand. Orders and net sales increased during the first nine months of fiscal 2007 over the corresponding period in fiscal 2006, primarily due to strong


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demand from DRAM and flash memory chip manufacturers, partially offset by a significant decline in the LCD equipment business as manufacturers absorbed capacity following substantial growth in 2006. Orders declined for the third quarter of fiscal 2007 compared to the prior year period reflecting the weakness in demand for LCD equipment, in addition to a drop in demand for equipment from foundries and logic customers and lower fab operations demand. Sales increased slightly for the third quarter of fiscal 2007, compared to the third quarter of fiscal 2006, as strength in memory was offset by lower fab operations spending.
 
Net income for the first nine months of fiscal 2007 improved compared to the same period in the prior year due to higher sales and lower restructuring and asset impairment charges and a continued focus on operating efficiency and cost controls, offset in part by lower interest income. Fiscal 2007 results included restructuring and asset impairment and other charges associated with ceasing development of beamline implant products, equity-based compensation expenses, and an in-process research and development (IPR&D) expense associated with the acquisition of certain net assets of Brooks Automation, Inc. (Brooks Software). Net income for the third quarter of fiscal 2007 declined compared to the same period in the prior year due to lower interest income and losses recognized on the equity method investment, partially offset by savings from a continued focus on operating efficiency and cost controls.
 
This excerpt taken from the AMAT 10-Q filed Feb 28, 2007.
Overview
 
Applied develops, manufactures, markets and services semiconductor and semiconductor-related fabrication equipment, providing nanomanufacturing technologytm solutions to the global semiconductor, flat panel display, solar and other industries. Product development and manufacturing activities occur in North America, Europe and Israel. Applied’s broad range of equipment and service products are highly technical and are sold through a direct sales force. Customer demand for spare parts and services is fulfilled through a global spare parts distribution system and trained service engineers located around the world in close proximity to customer sites.
 
As a supplier to the semiconductor and semiconductor-related industries, Applied’s results are primarily driven by worldwide demand for integrated circuits, which in turn depends on end-user demand for electronic products. The industries in which Applied operates are volatile, and Applied’s operating results have reflected this volatility.
 
The following table presents certain significant measurements for the three months ended January 29, 2006 and January 28, 2007:
 
                         
    Three Months Ended  
    January 29,
    January 28,
       
    2006     2007     % Change  
    (In millions, except per share amounts and percentages)  
 
New orders
  $ 2,041     $ 2,538       24 %
Net sales
  $ 1,858     $ 2,277       23 %
Gross margin
  $ 838     $ 1,063       27 %
Gross margin percent
    45.1 %     46.7 %     4 %
Net income
  $ 143     $ 403       183 %
Earnings per share
  $ 0.09     $ 0.29       223 %
 
Customer demand increased in fiscal 2006, resulting in higher orders and revenue. Fiscal 2006 results reflected a recovery in the semiconductor and semiconductor-related industries and the global economy as end-user demand for electronic products and flat panel displays drove increased customer requirements for advanced silicon and display products. During this period, Applied’s semiconductor customers increased both high-volume production and leading-edge 65nm and 45nm chip development. Results for this period also reflected Applied’s continued focus on cost controls. Improvements in operating performance were offset in part by restructuring and asset impairment charges associated with real estate and facilities disinvestment that commenced during the first fiscal


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quarter, equity-based compensation expenses and an in-process research and development expense associated with the acquisition of Applied Films Corporation (Applied Films).
 
In the first quarter of fiscal 2007, Display customers delayed their capacity expansion plans, resulting in a significant decrease in orders. This decline was partially offset by record Fab Solutions orders and increased Silicon orders. During the quarter, growth also slowed in semiconductor demand and chip manufacturers reduced production and delayed capacity additions. The operating results in the first quarter of fiscal 2007 were achieved through continued focus on cost controls, despite a slight decline in orders and net sales.
 
Applied’s long-term opportunities depend in part on successful execution of its growth strategy, including increasing market share in existing markets, expanding into related markets, and cultivating new markets and new business models. These opportunities are also subject to many factors, including: (1) global economic conditions; (2) advanced technology and/or capacity requirements of semiconductor manufacturers and their capital investment trends; (3) the profitability of chip and display manufacturers; (4) supply and demand for chips, flat panel displays, solar panels, and related products and services; (5) realization of the anticipated benefits of business combinations; (6) continued investment in research, development and engineering (RD&E); and (7) the relative competitiveness of Applied’s equipment and service products. For these and other reasons set forth in Part II, Item 1A, “Risk Factors,” Applied’s historical consolidated results of operations may not necessarily be indicative of future operating results.
 
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