The Dividend Daily

Semiconductor components maker Applied Materials, Inc. (AMAT) said late Wednesday that its third quarter profit dropped 40% from last year, hurt by lower revenue, and also announced a big round of job cuts.

The Santa Clara-based company reported third quarter net income of $138 million, or 10 cents per share, down from $231 million, or 17 cents per share, in the year-ago period. Excluding items, adjusted profit was 13 cents per share.

Revenue fell 25% from last year, to $1.53 billion.

On average, Wall Street analysts expected a much lower profit of 3 cents per share, on significantly smaller smaller revenue of $1.32 billion.

In order to further cut costs, the company said it would slash 1,300 to 1,500 jobs, or about 10% to 12% of its workforce. Looking ahead, it said it expects net sales to rise by over 30% in fiscal 2010.

Applied Materials shares fell 30 cents, or -2.3%, in premarket trading Thursday.

The Bottom Line
We have avoided shares of AMAT, since our early June coverage began last year and the stock was trading at $18.89. The company has a 1.81% dividend yield, based on last night’s closing stock price of $13.25. The stock has near-term technical support in the $10.00-$10.50 price area. If the shares can firm up, we see overhead resistance around the $14-$16 price levels. We would remain on the sideline for now.

Applied Materials, Inc. (AMAT) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.

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