Summary
Applied Materials, Inc. reported a decrease in net sales for the third quarter and the first nine months of fiscal year 2019 compared to the same periods in the prior year. This decline was primarily attributed to reduced customer investments in semiconductor and display manufacturing equipment, particularly from memory customers. Despite the revenue dip, the company's global services business showed continued growth. While overall sales were down, the company maintained a strong financial position with a significant amount of cash, cash equivalents, and investments. Management has outlined plans for strategic growth, including the proposed acquisition of Kokusai Electric Corporation, and continues to return capital to shareholders through dividends and share repurchases. The company anticipates ongoing softness in the market through 2019 but remains focused on long-term growth drivers in the semiconductor and display industries.
Financial Highlights
57 data points| Revenue | $3.56B |
| Cost of Revenue | $2.00B |
| Gross Profit | $1.56B |
| R&D Expenses | $515.00M |
| Operating Expenses | $755.00M |
| Operating Income | $802.00M |
| Interest Expense | $58.00M |
| Net Income | $571.00M |
| EPS (Basic) | $0.61 |
| EPS (Diluted) | $0.61 |
| Shares Outstanding (Basic) | 929.00M |
| Shares Outstanding (Diluted) | 937.00M |
Key Highlights
- 1Net sales decreased by 14% in the third quarter and 16% for the first nine months of fiscal 2019 compared to the prior year, driven by reduced customer spending on manufacturing equipment in the semiconductor and display sectors.
- 2The Semiconductor Systems segment, while experiencing a 12% Q/Q and 19% Y/Y sales decline, remains the largest contributor to revenue.
- 3The Applied Global Services segment showed resilience, with a slight increase in sales for the nine-month period and remained a significant contributor to overall revenue.
- 4The Display and Adjacent Markets segment saw a substantial decline of 45% in Q/Q and 33% Y/Y net sales, reflecting weakness in mobile and TV display manufacturing equipment investment.
- 5Gross margin decreased to 43.7% in Q3 2019 from 44.8% in Q3 2018, primarily due to lower net sales and unfavorable product mix.
- 6Operating income saw a significant decrease, down 26% in Q3 and 36% Y/Y for the nine-month period, reflecting lower sales and increased R&D expenses.
- 7Applied Materials announced a proposed acquisition of Kokusai Electric Corporation for $2.2 billion in cash, subject to regulatory approvals.
- 8The company returned $577 million to stockholders through dividends and repurchased $1.9 billion in stock during the first nine months of fiscal 2019.