Applied Materials Q4 preview: Softer results expected amid slowing growth

[Close-up of Silicon Die are being Extracted from Semiconductor Wafer and Attached to Substrate by Pick and Place Machine. Computer Chip Manufacturing at Fab. Semiconductor Packaging Process.]
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Semiconductor supplies equipment company Applied Materials (AMAT [https://seekingalpha.com/symbol/AMAT]) is set to report its fourth-quarter earnings on Thursday, November 13th, after the closing bell.

Street expects a more than 9% decline in earnings per share to $2.10 on revenue of $6.67B, down over 5% from last year.

Seeking Alpha analyst Luca Socci pointed out in a recent note that despite strong execution and high free cash flow, Applied Materials’ growth has slowed, and margins may compress [https://seekingalpha.com/article/4841948-applied-materials-q4-preview-why-i-think-this-is-wrong-entry-point] as the company enters a mid-cycle phase.

Investors should expect softer Q4 results.

Applied Materials (AMAT [https://seekingalpha.com/symbol/AMAT]) management said in their last earnings call that the forecast for this quarter is to see revenue and earnings be sequentially lower because of China.

“Nonetheless, the fiscal year should end with 4-6% growth,” Locci said.

In the past two years, AMAT has beaten EPS estimates [https://seekingalpha.com/symbol/AMAT/earnings/eps-surprise-summary] 100% of the time and has beaten revenue estimates 88% of the time.

Applied Materials last month announced a 4% reduction in its global workforce [https://seekingalpha.com/news/4507945-applied-materials-announces-4-global-workforce-reduction]. The company said it expects [https://seekingalpha.com/filing/10555395#exhibit991eml102325_htm#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews] to incur charges of about $160 million to $180 million, consisting primarily of severance and other one-time employment termination benefits to be paid in cash, and other non-cash-related charges.

In the past three months, EPS estimates have seen 27 downward revisions, while revenue estimates have seen 25 downward revisions.

MORE ON APPLIED MATERIALS

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* Applied Materials announces 4% global workforce reduction [https://seekingalpha.com/news/4507945-applied-materials-announces-4-global-workforce-reduction]