Applied Materials: "The Sun Also Rises -- but Slowly " (AMAT)

From Barron's:

IT MAY BE A YEAR BEFORE APPLIED MATERIALS sees a spring thaw. The clouds blanketing the big supplier of semiconductor- production gear and its customers are thicker than even Barron's expected when we skeptically examined the company's ambitions in solar energy ("Applied Materials' Forecast: Hazy, Rain Possible," April 14, 2008). The suffering among manufacturers of memory chips, large-screen TVs and solar panels threw Applied for a surprising loss in the quarter ended January and sent the Santa Clara, Calif.-based company's shares to less than eight bucks, from around 19 at the time of last year's story. Lately, the stock (ticker: AMAT) has crawled back to about $11.80.

The credit crunch has been a double whammy for Applied 's nascent solar business, says Mark Pinto, who runs that business along with all of Applied's research. Financing is scarce for the developers of solar-energy projects and also for manufacturers who would buy Applied equipment to make panels. But 2010 should be a better year, he hopes. Pinto believes financing will reappear for Applied customers in the next 12 months.

That is also his timeline for delivering technical improvements to the Sun- Fab product line to produce solar panels competitive with those from costleader First Solar (FSLR) and the producers of traditional crystalline-silicon solar cells, who have seen a recent plunge in their cost of silicon. Applied's main businesses should also see a demand upturn next year as customers tool up for the next generation of semiconductors and flat-panel displays. That market outlook-and a solid balance sheet with more than two bucks a share in net cash and four-and-a-half bucks of tangible book value-should put a floor under the stock if it drifts again into the single digits....MORE