Applied Materials Reports Sharply Lower Results

Applied Materials, the world's largest manufacturer of semiconductor production equipment, posted its first quarterly loss since 2003 and said it would cut back production, sending its shares sliding 3 percent.

Chief Executive Mike Splinter said the company hoped to save about $400 million annually from a raft of previously announced cost-cutting measures, including job cuts, to tide it through the chip industry's worst-ever downturn.

Splinter said the company was preparing to launch "multi-week shutdowns" in the fiscal second and third quarters, as it expects a halving of the market for crystalline silicon equipment.

Shares of Applied Materials , which have fallen about 40 percent over the past year, were down from a regular close of $9.69.

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"So how bad is it? Our leading semiconductor customers say that the fall-off in chip demand and pricing is the most severe they have ever experienced. Losses are mounting almost universally," Splinter told analysts on a conference call. "We expect revenue decreases across all segments."

Splinter did not give specific forecasts for the current quarter.

Applied Materials reported a loss, excluding items such as equity-based compensation, gains on sales of facilities and inventory adjustments, of $3 million, or 0 cents per share, in the first fiscal quarter ended Jan. 25.

The company had warned previously that it could make its first quarterly loss since 2003. It posted first-quarter revenue of $1.33 billion, in line with its own forecast.

Applied Materials joins a spate of other chip gear makers, from rival Tokyo Electron to Novellus , in the red as consumers and businesses buy fewer items that need chips.

Applied Materials, which plans to slash 1,800 jobs or 12 percent of its workforce by the end of the current fiscal year, has pushed aggressively into solar equipment to galvanize growth.

But analysts say even investment in that sector was slowing with credit drying up.

Company executives have said they intend to continue cutting back on programs and costs, including through plant shutdowns and additional restructuring.

Global semiconductor sales dived 22 percent in December, accelerating a months-long decline, according to the Semiconductor Industry Association.

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