One On One With Michael Splinter, CEO of Applied Materials
Wednesday, February 15, 2006
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SUSIE GHARIB: Applied Materials said late today its sales and orders rose in its fiscal first quarter, even though net profits fell. But excluding special charges, the world`s largest chip equipment maker said it earned $0.19 a share, $0.03 higher than estimates. The stock rose almost 2 percent in after-hours trading. Joining us now to talk more about the outlook, Michael Splinter, CEO of Applied Materials. Welcome back to NIGHTLY BUSINESS REPORT, Mr. Splinter.
MICHAEL SPLINTER, PRES & CEO, APPLIED MATERIALS: Thank you.
GHARIB: Well, you said today that revenues for the current quarter, that your second fiscal quarter, are estimated to increase by 13 to 15 percent and you`re also forecasting higher orders. How long does this last? What`s the sustainability?
SPLINTER: Well, we`re really thinking that we`re in the early phases of a cyclical upturn here. The signs are all good, the economy is good, the use of high-tech semiconductors is expanding quite dramatically. And our customers` factories are full, so these are all great signs for us.
GHARIB: What are your customers telling you when you speak with them in terms of the tone? Are they feeling that things are a lot better?
SPLINTER: Well, they are. And they`re feeling that they have the confidence to make big investments. A semiconductor factory costs between $2 and $3 billion and so these are big investments, bet-the-company kind of investments and especially the memory makers these days are making these big bets.
GHARIB: What other areas are driving growth?
SPLINTER: Well, again, primarily it`s memory is almost 50 percent of our orders this quarter. But logic is also going strong and the foundry segment, we`re still waiting to see increased expansion there.
GHARIB: So how is all of this translating for AMAT in terms of companies looking for more equipment?
SPLINTER: Well, we`re very positive about that. We have a very strong manufacturing group that are going to be able to hold lead times and supply the equipment our customers need over the foreseeable future. There`s a lot of opportunity right now for growing share with some new technologies that we have that we`ve introduced over the past year and are now starting to take hold, especially with the memory manufacturers.
GHARIB: Well, I understand that you have been introducing some new tools in new areas like metrology. How are they helping to propel your business? What`s the strategy there?
SPLINTER: Well, let me just give you one example. You`re right, metrology is growing fast. We`ve shipped our new, what we call U-Vision tool (ph) that 12 of the top semiconductor makers. They`re starting to buy more of those, repeat orders, that`s great. In another area, advance patterning films. This is very important for moving along Moore`s law and shrinking devices. This area has doubled over the last six months. It`s really going strong.
GHARIB: Now, I understand that you have a lot of cash on the books. You have been buying back stock, you have introduced a dividend. But what are your plans for all that money?
SPLINTER: Well, we have been buying back. Last quarter we bought back $500 million worth of our shares. We projected that we`d buy back $300 to $500 million again this quarter. But we really will talk to our shareholders about our cash plan and cash strategy for the year at our annual meeting in the middle of March.
GHARIB: All right. Well, thank you very much. We really appreciate you coming on NIGHTLY BUSINESS REPORT.
SPLINTER: Thanks so much.
GHARIB: We`ve been speaking with Michael Splinter, CEO of Applied Materials.
