Applied Materials Inc. reported fiscal first-quarter earnings Tuesday that beat analysts' expectations, yet it warned that falling prices for memory chips and economic turmoil in Asia will hurt results in the next few quarters.
The world's largest maker of equipment used in the manufacture of computer chips said profit from operations for the three months ended Jan. 25 rose to $197.8 million, or 52 cents a diluted share, from $89.1 million, or 24 cents, a year ago. Analysts had expected earnings of 50 cents a diluted share, according to IBES International Inc.
Applied's warning illustrates the problems that chip makers and related companies are having because excess manufacturing capacity is pushing memory chip prices down and falling currency values in South Korea and Malaysia are forcing companies there to delay new investments. One research firm cut its forecast for 1998 sales growth in the $160-billion semiconductor industry to 7% from 17%.
"It's a perfect proxy for what's happening in the industry," said analyst Vadim Zlotnikov of Sanford C. Bernstein & Co. "There's been a decline in growth of demand."