“Much better than expected top line perform as well, $1.13 billion consensus was around $955 million. The big question here for Applied Materials is going to come with fourth quarter guidance and whether this company is seeing a marked improvement in business for the back half of 2009, and any kind of guidance the company can give us as far as global semiconductor equipment orders are concerned.

As we look at new orders, the company was able to book $1.07 billion in new orders on the but the backlog fell to $2.95 billion. That compares to $3.16 billion for the previous quarter. All of these numbers obviously substantially lower than the company’s third quarter of last year but by and large, the company was able to beat and beat effectively on the top and bottom line. That top line number is going to generate a lot of interest because as we always focus on the bottom line, everybody analysts and investors alike want to see growth as far as sales are concerned and Applied Materials was able to perform at least on the top.” — CNBC’s Closing Bell on 8/11/2009

Applied Materials (AMAT) reported earnings for the third quarter on Tuesday afternoon; one of the last major tech companies to do so this earnings season. On a non-GAAP basis they were able to just about break even on better than anticipated revenue. As for standard GAAP results, the company reported negative $55 million in net income or a loss of 4 cents per share. Wall Street had anticipated a loss of 8 cents per share on revenue of $958 million. Importantly, Applied Materials easily beat expectations for revenue, which came in 18% better than anticipated. The backlog of business was slightly lower than at the end of the previous quarter, but guidance for break even to 4 cents per share of profit in the 4Q should excite investors. All things considered, the revenue result for the quarter was better than we expected and a positive revision to fourth quarter guidance is sending AMAT higher in after hours trading.

AMAT The world’s largest semiconductor equipment maker has endured some extremely challenging times over the past year as semiconductor demand has been slack during the downturn. In addition, the company’s research and development investments, particularly on solar technology, have been costly and have yet to pay off. The Energy and Environmental Solutions business was again the weakest division over the last quarter. AMAT’s solar technology branch, named SunFab, has ramped up production after earlier attempts were derailed by credit problems, and AMAT hopes that they will finally start to see their investments paying off over the coming quarters. So far, it has not panned out but the technology has loads of potential. The solar energy business has been an expensive experiment for Applied Materials, but if crude oil prices continue to rise then of course demand for alternatives will rise with it.

Recent developments in the semiconductor industry suggest that the worst is likely over. Although industry-wide sales for the second quarter have fallen 20% from a year ago, they have actually risen 17% sequentially according to the Semiconductor Industry Association. AMAT offered upbeat guidance for the upcoming quarter, and predicts that revenue will increase 10%-20%. Year to date Applied Materials has greatly outperformed the broad market indices, gaining more than 30%. However, we are reiterating our Overvalued stance on AMAT at the current price level. It appears that revenue trends have taken a turn for the positive, and the company should return to profitability in the next quarter. However, with the current fundamentals we would not be interested in paying more than $11 for AMAT shares. Anything cheaper than that would start to pique our interest.

Applied Materials Expects Profit in 4Q