Wafer fabrication systems company Applied Materials Inc has reported a whopping $186.7m loss for its fourth quarter, compared to net income of $180.1m, or $0.47 per share, in the year-ago quarter. Revenue for the period fell 47.4% to $673.2m. Gross margins were 42.3%, down from 48.1% last year and from 44.6% for the third quarter. For the full year, the company posted net income that fell 53.7% to $230.9m on revenue that remained essentially flat at $4.04bn. Results for the quarter were severely impacted by one-time restructuring costs – including $50m for employee severance and benefits, $50m for consolidation of facilities and related fixed assets and $70m for the write- down of intangible assets that were deemed impaired. Results also include $65m of pre-tax non-operating expense associated with a reserve for a doubtful receivable obtained in connection with the ASM International NV patent litigation settlement. In addition, the company recorded after-tax costs of $58m related to the discontinued operations of its 50-50 flat panel display joint venture, Applied Komatsu Technology Inc. One-time items aside, the company says that ongoing net income for the quarter was $26.4m, or $0.07 per share, down from $187.3m, or $0.49 per share, for the year-ago quarter, and from $70.6m, or $0.19 per share, for the preceding quarter. Wall Street was expecting net income of just $0.02 per share, excluding charges. Ongoing net income for the year was $436m, or $1.15 per share, down from $524m, or $1.39, for fiscal 1997. New orders of $684m for the fourth quarter decreased from $1.37bn for the year-ago quarter but increased from the third quarter’s $608m. Backlog at the end of the fourth quarter decreased to $917m from $1.0bn at the end of the third quarter. The company says its cost-cutting measures, which included laying off 15% of its workforce, basically allowed it to achieve its internal financial objectives. It insists that, although the semiconductor industry’s woes continue, customers are investing in equipment for 0.25 micron and 0.18 micron- capable technologies. But in the same breath it also cautions that despite some recent favorable developments in the world economy and the industry, the outlook for its business remains uncertain. The company did say that a strong asset management performance resulted in $1.76bn in cash and short-term investments on the balance sheet at the end of the fourth quarter.
