Applied Materials Rebounds to Post Profit

Applied Materials Inc., the world’s largest maker of semiconductor equipment, swung to profitability in its fiscal second quarter, driven by consumer electronics and greater demand in China for its products.

The Santa Clara, Calif., company earned $373 million, or 22 cents a share, on sales of $2 billion in the period ended May 2. It lost $62 million, or 4 cents, on $1.1 billion in revenue in the quarter a year earlier.

The results beat Wall Street’s expectations. Analysts polled by Thomson First Call predicted, on average, net income of $332.6 million, or 19 cents a share, and sales of $1.9 billion.

The company also said new orders, a gauge of future health, grew 32% to $2.2 billion from a year earlier. About 20% of those orders came from China and Southeast Asia.

“China continues to expand,” Chief Executive Michael Splinter said in a conference call with analysts.

Splinter estimated that the company’s annual equipment sales to China would reach $1 billion this year, “making this a major segment of our business and a growth region.”

Executives were cautious about the firm’s short-term outlook. Chief Financial Officer Joseph Bronson forecast that per-share earnings in its current quarter would be 23 cents to 25 cents and sales would grow 5% to $2.1 billion, in line with analysts’ expectations.

“Orders have been growing quite strongly the past two quarters, so it’s natural that there may be a pause,” said Bill Ong, senior analyst with American Technology Research, an independent research firm in San Francisco.

Shares gained 40 cents to $18.85 on Nasdaq but fell to $18.83 in after-hours trading after the earnings announcement.