Recent commentary from management at Applied Materials (Nasdaq:AMAT), Intel (Nasdaq:INTC) and Advanced Micro Devices (NYSE:AMD) seems to indicate the current semiconductor cycle is in a bottoming process, providing an opportunity for investors willing to make that bet.
Applied Materials Reports Messy Quarter
Applied Materials, which manufactures capital equipment for sale to Intel and others, recently reported on its fiscal second quarter ended April 26. The company had a GAAP loss of $255 million, or 19 cents per share. The quarter was a messy one, as usual for technology companies. But excluding one-time items and stock option expenses, the loss comes in at $136 million, or 10 cents per share.
New orders in the quarter totaled only $649 million, leading to a $3.16 billion decline in backlog – a drop of nearly $1 billion sequentially.
Management Optimistic Despite Recent Earnings
Despite the weak earnings report, management at Applied Materials gave optimistic comments about current conditions in the industry during the conference call……
……Investors who don’t want security specific risk can look at the Semiconductor HOLDRs (NYSE:SMH) or the PowerShares Dynamic Semiconductors (NYSE:PSI) – two ETFs that hold shares of semiconductor and capital equipment stocks.