Applied Materials (AMAT, Financials) shares fell more than 10% in extended trading Thursday after the semiconductor equipment maker issued a weaker-than-expected forecast for the current quarter, citing macroeconomic and policy headwinds.
For the fiscal third quarter, the company reported adjusted earnings of $2.48 per share on revenue of $7.3 billion, topping LSEG estimates of $2.36 per share and $7.22 billion in revenue. Net income rose to $1.78 billion, or $2.22 per diluted share, from $1.71 billion, or $2.05 per share, a year earlier.
The company projected adjusted earnings of $2.11 per share on $6.7 billion in revenue for the current quarter, below analysts’ expectations of $2.39 per share and $7.34 billion. Chief Executive Gary Dickerson said macroeconomic and policy conditions are creating increased uncertainty and lower visibility, with its China business particularly affected.
Applied Materials cited a large backlog of export license applications and said it is assuming none will be approved in the next quarter. The company expects fourth-quarter revenue to decline due to reduced demand from China and uneven orders from leading-edge customers.
Sales in its semiconductor systems unit rose 10% from last year to $5.43 billion, beating estimates. The company was included in an Apple initiative to expand U.S. chip manufacturing, with plans to make more manufacturing equipment in Austin, Texas, a move praised by President Donald Trump earlier this month.
This article first appeared on GuruFocus.