Tuesday, August 12, 2008

Examining Applied Materials Ahead of Earnings. And-Applied Materials: Quarter Weak, But AMAT Will Kill First Solar (AMAT; FSLR)

First up, from Schaeffer's Research:

As a regular reader of my columns, you should suspect that I will delve into Applied Materials (AMAT: View sentiment for AMATsentiment, chart, options) and the conditions surrounding the stock heading into the company's third-quarter earnings and business outlook - slated for release after the close on Tuesday. It has been said that AMAT serves as a window into the world of silicon (no pun intended). The relative well being of Applied Materials can be extrapolated across the sector. The chart below compares the performance of AMAT and the Semiconductor HOLDRS Trust ( SMH: View sentiment for SMHsentiment, chart, options) during the past 52-weeks. There are several incidences where AMAT serves as a "leading indicator" for the sector.

Daily chart of Applied Materials versus the Semiconductor HOLDRS Trust since August 2007

So, let's see if we can strip away some of the opalescence from that window by examining what we do know. First, the numbers: A consensus of 25 analysts expects the company to generate a bottom-line figure of 14 cents per share....MORE
And from ClusterStock:
Applied Materials (AMAT), a semiconductor/solar play, is up over 10% in the weeks leading up to its July Quarter earnings (Tuesday, August 12th, after close). FBR doesn't see any catalysts that will drive the stock higher near term:

...we expect an in-line quarter, with booking declining 25% QOQ, at the low end of the guidance range of -15% to -25%. We also expect downside risk to the October-quarter consensus estimates, though we do not expect AMAT to include any TF [thin-film] solar revenue in the guidance, given uncertainties associated with the timing of qualifications. October-quarter bookings guidance is expected to be down ~5% QOQ, driven down by display/silicon, offset by (crystaline) solar.

Long term, FBR is betting on AMAT's solar business....MORE