Applied Materials’ stock dips on weak outlook

Applied Materials (AMAT) reported better-than-expected revenue and earnings for the first quarter of 2019 but the stock inched down 1.7% during aftermarket hours on Thursday as outlook fell short of expectations.

Net sales fell 11% year-over-year to $3.75 billion. GAAP net income improved to $771 million, or $0.80 per share, from $165 million, or $0.15 per share, in the prior-year period. On an adjusted basis, net income dropped 33% to $779 million while EPS fell 25% to $0.81.

Gary Dickerson, President and CEO, said “Applied Materials delivered solid first quarter results in a challenging business environment. As we navigate the current market dynamics, we remain highly optimistic about the long term and are investing in new technology, products and capabilities that position the company to play a bigger and broader role in the industry’s future.”

During the quarter, sales declined in the Semiconductor Systems segment while in the Applied Global Services and the Display and Adjacent Markets segments, sales rose compared to the prior-year period.

The company delivered sales increases across all its major geographies except for Korea, Taiwan and Southeast Asia which posted declines. 26% of the sales came from China.

For the second quarter of 2019, the company expects net sales to be $3.33 billion to $3.63 billion. Adjusted EPS is expected to be $0.62 to $0.70.

Applied Materials returned $942 million to shareholders including $750 million in share repurchases and dividends of $192 million.

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