Applied Materials Reports Reduced Sales for 4Q and Year

Applied Materials, Inc. (Nasdaq:AMAT) reported results for its fiscal year and fourth quarter ending October 26, 2008.

Fourth quarter net sales were $2.04 billion, down from $2.37 billion for 4Q07, and up from $1.85 billion for 3Q08. Gross margin was 39.1%, down from 45.5% for 4Q07, and down from 40.2% for 3Q08. GAAP net income was $231 million, or $0.17 per diluted share, down from net income of $422 million, or $0.30 per diluted share, for 4Q07, and up from $165 million, or $0.12 per diluted share, for 3Q08.

New orders of $2.21 billion for 4Q08 were comparable to the 4Q07, and increased from $2.03 billion for 3Q08. Regional distribution of new orders for 4Q08 was: Taiwan 26%, North America 22%, Southeast Asia and China 22%, Europe 11%, Korea 10%, and Japan 9%. Backlog at the end of 4Q08 was $4.85 billion, up from $4.74 billion at the end of 3Q08 and up from $3.65 billion at the end of fiscal 2007.

Fiscal 2008 net sales were $8.13 billion, down from $9.73 billion for fiscal 2007. Gross margin for fiscal 2008 was 42.4%, down from 46.1% for fiscal 2007. GAAP net income for fiscal 2008 was $961 million, or $0.70 per diluted share, down from net income of $1.71 billion, or $1.20 per diluted share, for fiscal 2007. New orders of $9.16 billion for fiscal 2008 decreased from $9.68 billion for fiscal 2007.

"Fiscal 2008 was a pivotal year for Applied as we made significant progress in advancing our Silicon and Display businesses and expanding in the solar market. Our fourth quarter results demonstrate effective performance in a very challenging environment," said Mike Splinter, president and CEO. "We passed a major milestone as the first SunFabTM Thin Film Solar Line began volume production demonstrating Applied’s commitment to deliver exciting new technology to the solar industry.

"As Applied moves into fiscal 2009, we will implement further cost-reduction actions due to declining market conditions, and we will invest in strategic priorities," concluded Splinter.

Applied said it will implement a restructuring program beginning in 1Q09, designed to streamline the organization and reduce operating costs. When completed the program is expected to drive annualized cost savings of approximately $400 million. As part of this program, the company plans to reduce its global workforce by approximately 12% or 1,800 positions by the end of fiscal 2009 through a combination of attrition, voluntary separation and other workforce reduction programs consistent with local legal requirements and in consultation with employee representatives, where applicable.

Non-GAAP net income for fiscal 2008 was $1.20 billion, or $0.87 per diluted share, compared to non-GAAP net income of $1.90 billion, or $1.33 per diluted share, for fiscal 2007. Non-GAAP net income for 4Q08 was $264 million, or $0.20 per diluted share, compared to non-GAAP net income of $472 million, or $0.34 per diluted share, for the fourth quarter of fiscal 2007, and $228 million or $0.17 per diluted share for the third quarter of fiscal 2008.

Applied Materials, Inc. is the global leader in Nanomanufacturing Technology™ solutions with a broad portfolio of innovative equipment, services and software products for the fabrication of semiconductor chips, flat panel displays, solar photovoltaic cells, flexible electronics and energy-efficient glass.