10-KPeriod: FY2007

APPLIED MATERIALS INC /DE Annual Report, Year Ended Oct 28, 2007

Filed December 14, 2007For Securities:AMAT

Summary

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.

Financial Highlights

31 data points
Beta

Revenue

$9.73B

46.1% Gross Margin

Net Income

$1.71B

17.6% Net Margin

EPS (Diluted)

$1.20

Cash & Equivalents

$1.20B

Free Cash Flow

$2.21B

Financial Statements
Beta
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

Key Highlights

  • 1Net sales increased to $9.73 billion in FY2007 from $9.17 billion in FY2006, driven by demand in the memory chip sector.
  • 2Net income rose to $1.71 billion in FY2007 from $1.52 billion in FY2006, reflecting improved operational performance.
  • 3The company's R&D investment remained substantial, at $1.14 billion (12% of net sales) in FY2007, focusing on 45nm and below chip designs.
  • 4The Silicon segment, the largest contributor, saw operating income increase by 19% to $2.38 billion in FY2007.
  • 5The Display segment experienced a decline in new orders and net sales, attributed to customer delays in capacity expansion.
  • 6Applied Materials acquired Brooks Software for $137 million to enhance its factory automation and control software offerings.
  • 7The company's backlog stood at $3.7 billion at the end of FY2007, indicating strong future demand.
  • 8AMAT repurchased $1.3 billion of its common stock in FY2007 under its ongoing share repurchase program.

Frequently Asked Questions

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.

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.

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.

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.