One on One Michael Splinter, CEO of Applied Materials
Tuesday, May 15, 2007
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SUSIE GHARIB: Applied Materials posted strong quarterly earnings after the close today. The world's largest chip equipment maker earned $0.29 a share in its fiscal second quarter. That was a penny better than estimates. Revenues also came in better than expected, up 13 percent to $2.5 billion. Looking ahead, the company expects orders to drop 10 to 15 percent in the current quarter on flat revenues. Joining us now to talk more about the outlook, Michael Splinter, CEO of Applied Materials. Mr. Splinter, nice to have you back on the program.
MICHAEL SPLINTER, PRESIDENT & CEO, APPLIED MATERIALS: Thank you so much.
GHARIB: Tell us a little bit of what's behind the order decline. Is that because of an oversupply or something else?
SPLINTER: Well, it's primarily because of foundries. Their inventory didn't burn off quite as fast as we thought it would and so their orders for new capacity isn't coming back as quickly as we thought it would. But still there is a great number of 65 nanometer products coming out there going into production. So we think that this is more of a delay than an overall change in the major trends in the industry.
GHARIB: Some of the analysts I was talking to go said that there may be some demand for your business from the Microsoft Windows Vista system. Do you think that demands from Vista will drive, you know, more memory consumption?
SPLINTER: Well, it will help in two ways. First of all for D-rams and PC's, the number of bits is going to go up, because to get the right experience with Vista, you need more D-ram in a PC. So what we've been seeing so far this year on an overall basis is D-ram bit consumption is up 80 percent, which is really quite terrific. And if that continues, it portrays a very strong year for D-ram.
The other way is the replacement of solid state draw or the replacement of hard drives with what they call solid state drives or flash drives. This also improves the experience with Vista. So we're expecting that the adoption here is going to be very good for the semi-conductor industry.
GHARIB: You expressed some enthusiasm on your call with analysts today about a new area that AMAT is getting involved in, the solar panel business. Why is it time for Applied Materials to get into this deal?
SPLINTER: Well, we have technology that really helps customers drive down the cost of making solar cells. We're selling entire thin film solar cell lines. This is a great business. And Susie, we've been very surprised at the magnitude of this business. We set a projection for $200 million in contracts at the beginning of the year for our fiscal year. We've already passed $300 and we had to set a new goal of over $400. So this business is really going fast and we have the technology that can make it go even faster.
GHARIB: All right, well, good luck to you and thank you so much for coming on our program. We really appreciate it.
SPLINTER: Thank you.
GHARIB: My guest tonight, Michael Splinter, CEO of Applied Materials.
