01—Abstract
Summary
Summary of the 10-K filed December 14, 2007. Cited figures are marked; the original filing is the authoritative source.
Applied Materials Inc. (AMAT) has reported a strong performance in its fiscal year ending October 27, 2007, showcasing revenue growth and increased profitability.
The company, a leading supplier of nanomanufacturing technology solutions, benefited from robust demand in the semiconductor industry, particularly from memory chip manufacturers. AMAT's diversification into the Display and Adjacent Technologies segments, including solar, indicates a strategic move to capture growth in emerging markets.
While the Display segment experienced a slowdown due to industry-wide capacity adjustments, the company continues to invest significantly in research and development, focusing on next-generation technologies for semiconductor manufacturing. The company's financial health appears stable with a solid cash position and ongoing share repurchase programs.
02—Key points
Key Highlights
- Net sales increased to $9.73 billion in FY2007 from $9.17 billion in FY2006, driven by demand in the memory chip sector.
- Net income rose to $1.71 billion in FY2007 from $1.52 billion in FY2006, reflecting improved operational performance.
- The company's R&D investment remained substantial, at $1.14 billion (12% of net sales) in FY2007, focusing on 45nm and below chip designs.
- The Silicon segment, the largest contributor, saw operating income increase by 19% to $2.38 billion in FY2007.
- The Display segment experienced a decline in new orders and net sales, attributed to customer delays in capacity expansion.
- Applied Materials acquired Brooks Software for $137 million to enhance its factory automation and control software offerings.
- The company's backlog stood at $3.7 billion at the end of FY2007, indicating strong future demand.
- AMAT repurchased $1.3 billion of its common stock in FY2007 under its ongoing share repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2007, Applied Materials kept $0.18.
- Revenue$9.73B100.0%
- Cost of revenue−$5.24B53.9%
- Gross profit$4.49B46.1%
- Operating costs−$2.12B21.8%
- Operating income$2.37B24.4%
- Interest, other & tax−$661.3M6.8%
- Net income$1.71B17.6%
Where FY2007 revenue went
$9.73B- Cost of revenue: $5.24B, 54% of revenue
- Net income: $1.71B, 18% of revenue
- R&D: $1.14B, 12% of revenue
- Other operating costs: $978.9M, 10% of revenue
- Interest, other & tax: $661.3M, 6.8% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2007filed December 14, 2007Financial Statements
| Revenue | $9.73B |
| Cost of Revenue | $5.24B |
| Gross Profit | $4.49B |
| R&D Expenses | $1.14B |
| Operating Income | $2.37B |
| Interest Expense | $38.63M |
| Net Income | $1.71B |
| EPS (Basic) | $1.22 |
| EPS (Diluted) | $1.20 |
| Shares Outstanding (Basic) | 1.41B |
| Shares Outstanding (Diluted) | 1.43B |
05—Questions
Frequently Asked Questions
What were the main drivers of Applied Materials' revenue growth in FY2007?
Applied Materials' revenue growth in fiscal year 2007 was primarily driven by strong demand from memory chip manufacturers, particularly for DRAM and Flash memory devices, as well as continued investment in semiconductor manufacturing equipment across various product lines like etch, inspection, and thin films.
How did the company's diversification into new markets perform?
The company expanded into the Display and Adjacent Technologies (including solar) segments. While the Display segment saw a slowdown due to industry capacity adjustments, the Adjacent Technologies segment, particularly solar, showed significant growth in new orders and net sales, reflecting Applied Materials' strategic investment in emerging energy markets.
What is the company's outlook for fiscal year 2008?
Applied Materials anticipated a challenging environment for the first part of fiscal year 2008, citing uncertain economic conditions, higher energy prices, and credit concerns leading to reduced demand in the semiconductor equipment industry. However, they expected this to be partially offset by a potential recovery in the flat panel display industry and continued growth in other markets.
How is the company managing its capital and shareholder returns?
Applied Materials maintained a strong cash position, with cash, cash equivalents, and investments increasing to $3.7 billion in FY2007. The company continued its commitment to returning capital to shareholders through consistent quarterly cash dividends and significant share repurchases, spending $1.3 billion on repurchases in FY2007.
06—Continue