Applied Materials (AMAT) Swings to Q2 Profit But Traders Hesitant to Pull the Trigger

Applied Materials Inc. (NASDAQ: AMAT) said Wednesday that it returned to profit in the second quarter on the strength of its chip making tools and flat panels doubles the company’s sales volume.

The company’s shares are down fractionally in aftermarket movement following the results.

The maker of semiconductor-manufacturing equipment reported earnings of $264 million or 20 cents per share, reversing the loss of $255 million or 19 cents per share in the same quarter last year.

Excluding one-time items, the company earned 22 cents per share in the three month period ended May 2, a penny better than the 21 cents per share that was expected by analysts.

Revenue for AMAT jumped to $2.3 billion in the quarter from $1.02 billion last year, beating the market consensus of $2.24 billion.

“Applied’s stronger second quarter results were led by revenue and profitability gains in our silicon and flat panel display businesses,” said Mike Splinter, chairman and CEO. “Global demand for computing and consumer electronics is giving our customers the confidence to make significant capacity additions, fueling what we believe will be a multiyear growth cycle. During the quarter, we announced a 17 percent increase in our quarterly dividend and resumed our stock repurchase program.”

Looking forward, the company sees third-quarter sales down 2 percent to up 5 percent sequentially. Applied also guided third-quarter EPS to 22 cents to 26 cents, ahead of the Street’s outlook of 21 cents per share.

UPDATE: Click here to see some highlights from AMAT's Q2 conference call.

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