August 14, 2003 – Industry bellwether Applied Materials, Santa Clara, CA, says it lost $36.8 million in 3Q03 on $1.09 billion in sales, compared with a $115.2 million profit on revenues of $1.5 billion in 3Q02. The net loss was primarily due to a pre-tax charge of $164 million for realignment activities, announced in March, which include inventory write-offs, a 14% workforce reduction, and consolidation of facilities in Santa Clara, and Austin, TX. Without the charges, Applied would have realized a $0.05/share profit during the quarter, beating analysts’ estimates.

On another positive note, orders rose 9% from the previous quarter to $1.05 billion. Taiwan was the major source of orders with 36%, followed by North America (20%), Japan (18%), Korea (10%), Europe (10%), and Southeast Asia and China (6%). Orders were down 41% from 3Q02, reflecting the year-to-year overall state of the industry.

“Although semiconductor manufacturers continue to be cautious in their capital spending, we see positive indicators emerging,” said CEO Mike Splinter. “An improved global economy and higher fab utilization are giving customers the confidence to gradually invest in new technology for the transition to advanced chip designs and 300mm wafer production.”

Applied predicts 4Q04 sales will be up slightly to $1.09 billion, while orders will rise approximately 10%. The company also said that it expects more realignment charges of approximately $100 million in the fourth quarter.