The inventory glut that has plagued chip companies all year will continue at least another quarter.
Applied Materials sharply lowered January quarter guidance after the close on Wednesday. AMAT said it expects a 35% sequential decline in orders for the quarter, a 20-23% drop in sales, and earnings of 15-16 cents a share. Analysts had expected a slight decline in sales and earnings of 24 cents a share.
“As the fourth quarter progressed, some customers became more cautious in response to inventory concerns, slowing their 200mm investments,” AMAT CEO Mike Splinter said in a statement. “Even with these near-term market challenges, we believe our customers will continue to invest in advanced technology and 300mm manufacturing.”
Splinter said on the conference call that customers have developed “across the board cautiousness” in the last month.
For its fiscal fourth quarter that ended in October, AMAT beat estimates by a penny with 27-cent earnings, while revenues and margins came in lower than expected. Shares of AMAT slipped 3% after hours.
Also after the close, Intuit beat estimates but warned, and Netflix
jumped after raising guidance.
Stocks rallied during the day on strong earnings from HP and Network Appliance
and a merger announcement between Sears
and Kmart
, but inflation concerns and a late rally in oil limited gains.
The Nasdaq rose 21 to 2099, the S&P 500 climbed 6 to 1181, and the Dow rose 61 to 10,549. Volume surged to 1.69 billion shares on the NYSE, and 2.24 billion on the Nasdaq. Advancers led 22-10 on the NYSE, and 20-10 on the Nasdaq. Upside volume was 75% on the NYSE, and 78% on the Nasdaq. New highs-new lows were 409-12 on the NYSE, and 183-18 on the Nasdaq.
NetApp soared 18% on its results. HP
gapped up 8% to start the day, but ended the day with a 2.6% gain.
Brocade rose 5% on a deal with Hitachi
.
ScanSoft jumped 10% on a deal with Microsoft
.
SMTEK gained 8% on news that it will be acquired by CTS
.
Lightbridge fell 11% on a warning.