conference date: November 17, 2010 @ 1:30 PM Pacific Time
for quarter ending: October 31, 2010 (fourth quarter fiscal 2010)
Overview: Excellent quarter.
Basic data (GAAP) :
Revenues were $2.89 billion, up 15% sequentially from $2.52 billion and up 89% from $1.53 billion in the year-earlier quarter.
Net income was $468 million, up 280% sequentially from $123 million and up 239% from $138 million year-earlier.
EPS (earnings per share) were $0.36, up 300% sequentially from $0.09, and up 327% from $0.11 year-earlier
For Q1 fiscal 2011, sequentially down 8% to 15%. Non-GAAP EPS $0.30 to $0.34. LCD revenue expected to be down substantially.
Flat to modestly higher revenues, in range of plus or minus 10% for full fiscal 2011. Tax rate to drop due to phase in of Asian supply chain.
Applied had an outstanding Q4, with positive momentum going into the new fiscal year.
2 points of share gain in wafer fab equipment spending. While mindful of the fragile state of the global economy, sees continuing growth in Applied's markets in 2011. Tablets are leading transition to solid state storage, creating NAND memory demand, requiring more semiconductor manufacturing equipment. Solar demand continues to be strong.
Orders overall were up 11% in the quarter, with China demand leading.
Non-GAAP net income was $476 million, for EPS of $0.36.
Semiconductor equipment spending higher than expected in 2010, but could be up or down 10% in 2011. New fabs and expansions are now known to be planned. Applied expects to gain market share in every segment of the market. Revenues in Q4 were a record, fueled by new product offerings. Wafer level packaging market is particularly strong. Orders were $1.67 billion, revenues $1.48 billion. Order Composition: foundry 47%, logic and other 24%, DRAM 20%, Flash 9%.
Global Services (AGS) business should grow faster than wafer starts in 2011. Orders were $631 million, revenues $516 million, driven by 200mm equipment shipments.
Display group had one of the best quarters in its history, but there is some weakness in the consumer end market, so expecting to slow in 2011. However, can compensate by winning market share and in touch panels. $281 million net sales, the best recently, but orders dropped to $175 million.
Energy/Environmental/Solar (ESS) demand remains extremely robust and was profitable in the quarter. Top panel manufacturers are running at full capacity and adding capacity, but capital expenditures in the segment expected about flat in 2011. China and Taiwan now have about 65% of global market share; AMAT is strong in China. Two SunFab signoffs contributed to higher than expected growth in the quarter. Orders were $546 million, with sales of $606 million.
Gross margin was 42.2%
Cash and equivalents increased to $3.89 billion. $525 million operating cash flow. $150 million used to buy back shares. Cash dividend payments were $93 million.
Backlog increased to $3.24 billion, up $114 million.
Wafer fabrication equipment (WFE) guidance for 2011? We only really have visibility for Q1. About a 7% growth in PCs translates to flat equipment sales. NAND spending is driven by tablets and smartphones, we see that segment as flat.
Gross margins given changing segment strength? It was a noisy number the last two years. We would have been around 44% if we had not lost 2% to the SunFab sign off, so that could serve as a number going forward.
We are incurring significant costs to support our customers due to supply chain issues, when we get past that margins should improve a few points.
In 2011 we expect the mix to lean more towards NAND manufacturing equipment.
Dynamics of tablets and NAND? We just thing the greater investment will be in second half, largely due to a single factory in Japan. $4 billion Flash spending in 2010, that run rate should continue and grow in 2011.
Solar in 2011? Seeing an 18 to 20 gigawatt run rate. Our customers have confidence to continue to invest strongly in capacity. The bigger guys are at capacity and adding capacity. As the pricing is coming down, the demand goes up and new manufacturing capacity is needed.
Crystalline solar business operating margin? Conservatively better than 10% operating margins. But can do better than that model, depending on revenue levels.
Foundry cap ex in 2011? We see it as fairly strong throughout the year, up slightly and even throughout the year.
200 mm wafer demand? We think we are in a bit of a surge right now because so much was taken off in 2009, but demand came back for a number of devices. Expect peak some time in 2011, then a decline to steady state.
The big pitfall in predicting demand in 2011 is the end demand for PCs and NAND.
We are excited about etch gains in Flash memory, also double patterning gains, CMP (chemical mechanical polishing). Conversion to metal gate helped PVD business. Conversion to copper for memory has helped SemiTool. We won over 60% in wafer level packaging.
Orders v. revenues in SSG (silicon systems group)? We started with a low backlog, and did high turns, so orders have been up more than revenues. Does not imply orders dropping in Q1.
OLED market size? OLED used to be for small form factors. We are seeing upgrades for factories; one manufacturer is making larger OLEDs for TVs.
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