By Lisa Beilfuss 

Applied Materials Inc. said orders hit a 15-year high in its latest quarter, prompting the maker of semiconductor manufacturing tools to project a major rebound in its business later this year as those transactions are completed.

The company's second-quarter results topped expectations, as did a projection for fiscal third-quarter results.

Applied attributed the gains primarily to spending on new machines to produce memory chips and displays. Strong demand from customers in China was cited as another factor.

The company's shares rose nearly 8% in after-hours trading.

The Santa Clara, Calif., company sells equipment to make chips used in a wide range of products, including mobile phones. Its machines are also used to make displays for TVs and other products.

The company reported that second-quarter net income declined 12% and revenue was flat. But orders surged 37% from a year earlier and 52% from the previous quarter, hitting $3.5 billion.

Gary Dickerson, Applied's chief executive, said one key driver is a shift in the way companies plan to make the NAND flash memory chips that are used in most mobile devices. The new approach, called 3-D NAND, involves stacking layers of circuitry rather than trying to make each transistor smaller. That requires new production tools sold by Applied and others.

Another factor is the growing demand for displays built using organic light-emitting diode, or OLED, technology, rather than liquid-crystal displays.

In China, meanwhile, both domestic companies and those based elsewhere are building new manufacturing capacity, Mr. Dickerson said.

"These are big inflections, big waves that we think are sustainable over the next few years," Mr. Dickerson said in an interview.

Applied reported a profit of $320 million for the quarter ended May 1, down from $364 million a year earlier. On a per-share basis, earnings were flat at 29 cents because of a lower share count. Revenue of $2.45 billion compared with $2.44 billion in the year-earlier period.

Excluding restructuring charges, among other items, profit per share came to 34 cents. On that basis, analysts had projected 32 cents on revenue of $2.43 billion.

For the current quarter, the company said it expects 46 cents to 50 cents in adjusted earnings per share, well above the 36 cents analysts had anticipated. Sales will rise 14% from a year earlier, the company said, translating to $2.84 billion. Analysts had predicted $2.51 billion in sales for the July period.

Write to Don Clark at don.clark@wsj.com and Lisa Beilfuss at lisa.beilfuss@wsj.com

 

(END) Dow Jones Newswires

May 19, 2016 18:27 ET (22:27 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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