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Applied Materials whiffs across the board on earnings, stock drops

Applied Materials Inc. shares declined in the extended session Thursday after the semiconductor-manufacturing equipment maker missed on earnings, revenue and its forecast and pointed at continuing supply-chain issues.

Applied Materials 
AMAT,
-0.54%

reported net income of $1.54 billion, or $1.75 a share, for the fiscal second quarter. Adjusted earnings, which excluded the effects of share-based compensation and other items, were $1.85 a share, compared with $1.63 a share in the year-ago period. Revenue rose to $6.25 billion from $5.58 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast adjusted earnings of $1.90 a share on revenue of $6.35 billion. Shares declined about 5% in after-hours trading, following a 0.5% decline in the regular session to close at $110.74. The stock has fallen roughly 10% in the past 12 months, right in line with the performance of the S&P 500 index 
SPX,
-0.58%
.

Demand for the equipment Applied Materials makes is high, given that silicon-wafer manufacturers, known as fabrication plants or “fabs,” have had more orders than capacity during the COVID-19 pandemic as semiconductors needed to make electronics, cars and other products have been in short supply for about two years running. Applied Materials needs chips and other components to make its equipment as well, however, and has struggled with the same supply-chain issues.

“Demand for Applied Materials’ products and services has never been stronger, yet we remain constrained by ongoing supply-chain issues,” Chief Executive Gary Dickerson said in a statement.

For the third quarter, Applied Materials forecast adjusted earnings of $1.59 to $1.95 a share on sales of $5.85 billion to $6.65 billion. Analysts on average had been expecting adjusted earnings of $2.04 a share on revenue of $6.68 billion, according to FactSet.

Other fab-equipment suppliers have noted in unison that their sales are held back by supply constraints amid high demand, as was seen in earnings reports from ASML Holding NV
ASML,
-0.44%
,
 Lam Research Corp.
LRCX,
-1.12%
,
 and KLA Corp. 
KLAC,
+1.40%

back in April.

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