Applied Materials (NASDAQ: AMAT), a technology company that provides solutions to industries involved with such things as semiconductors, flat panel displays and solar photovoltaic cells, and whose colleagues include KLA-Tencor (NASDAQ: KLAC) and LAM Research (NASDAQ: LRCX), reported earnings for the third quarter on Tuesday.
They weren't great. The top line decreased by 28%, coming in at $1.8 billion. Adjusted earnings per diluted share dropped well over 50% to 17 cents. Although these numbers are horrible, it should be noted that the company at least beat estimates of 14 cents per share.
Well, not to be a downer or anything, but Applied Materials is not the tech stock I want to be in right now. It is suffering through a dismal economic environment, and the growth rates just don't look good. Not only do you have these year-over-year declines, but you've also got sequential-quarter statistics showing a negative trend. Plus, new orders are down significantly, and the gross margin took a dive.
Is there any saving grace to the report? Yes. Cash flow from operations was essentially flat over the nine-month timeframe at almost $1.6 billion. Hey, flat is better than a decline, correct?
The stock didn't see a huge reaction in the after-hours session Tuesday. It went up a little over 1%. As the press release indicated, these results were in the ballpark of previous guidance.
The shares have been trading in something of a tight range, with the 52-week low being $16.13 and the 52-week high pegged at $22.10. It closed yesterday at $18.47.
As I aforementioned, I don't want to buy Applied Materials right now. I'd only take a look if it broke out of this narrow range and made a new high on heavy volume. I don't find this to be an interesting value situation, and if I want to find a tech company to add to my portfolio, I'd probably look at other businesses such as Microsoft (NASDAQ: MSFT) or IBM (NYSE: IBM).
Disclosure: I don't own any company mentioned; positions can change at any time.
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