Leaner Applied Materials Beats Expectations

Applied Materials Inc. said Tuesday that its fiscal fourth-quarter operating earnings fell less than expected as cost cutting by the No. 1 maker of semiconductor-manufacturing equipment helped offset a drop in sales.

Operating profit fell to $26.4 million, or 7 cents a share, before charges resulted in a loss. That’s down from profit of $187.3 million, or 49 cents, a year ago. Applied was expected to earn 2 cents a share in the period ended Oct. 25, the average estimate of analysts polled by First Call Corp. Sales fell 47% to $673.2 million from $1.28 billion.

Applied Materials’ sales have plunged as computer-chip makers scale back plans for new plants because of excess supply, plummeting chip prices and the economic crisis in Asia, where many are based. The company has cut 15% of its work force and trimmed executive salaries by 10% to help compensate.

Shares of Santa Clara-based Applied rose $1.06 to close at $37.38 on Nasdaq. The company reported earnings after the close of regular U.S. trading. Applied stock has risen 60% since early October, as optimism for a chip-industry rebound increased.

While chip sales are forecast to fall 11% this year, according to the Semiconductor Industry Assn., sales next year are predicted to rise about 9%.

Including restructuring charges, Applied had a loss of $186.7 million, or 51 cents a share. A year ago, net income including a charge for settlement of litigation was $180.1 million, or 47 cents.

At a Glance

Other earnings, excluding one-time gains and charges unless noted:

* Los Angeles-based Arden Group Inc., which operates 13 Gelson’s and Mayfair supermarkets in Southern California, reported net income of $2.8 million, or 80 cents per share, compared with income of $2.3 million, or 57 cents, a year earlier. Sales rose to $74.1 million from $65.9 million a year ago.

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MORE EARNINGS: C3