Apply Patience To Applied Materials

Technology investors are not always the most patient lot on Wall Street, and it is certainly true that a buy-and-hold approach towards sectors like semiconductors will produce some pretty nasty year-to-year volatility. That said, patient investors might want to think about swimming against the current on Applied Materials (Nasdaq:AMAT). Investors have certainly cooled on some parts of the chip sector and Applied's iffy guidance to start the next year will not help matters, but there could be real value here for more patient buyers.

A Solid End To The Fiscal Year
While guidance will probably emerge as the dominant theme from Applied Material's report, the fiscal fourth quarter was actually pretty solid. Revenue rose almost 15% sequentially and jumped 89% from last year's level, easily beating both the average analyst guess and the highest published estimate. Sales were led once again by the Silicon Systems Group, but the sequential growth came from every other business unit but SSG.

Profitability was also substantially better than in the year-ago period. Adjusted gross margin rose six full points from the year-ago period and even more on a sequential basis. Operating profit (again, adjusted) was likewise strong - more than doubling on a sequential basis.


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