Applied had a strong quarter with its solar equipment sales, but next quarter will be down. The years ahead remain murky for the company's crystalline silicon equipment group in the face of an impending industry-wide factory capacity oversupply.
Eileen Tanghal, Investment Director at Applied Materials, spoke on a cleantech panel at a recent Orrick event and had this to say about the solar industry, at least from Applied Materials' equipment vendor perspective: "This year will be the best year we're going to see in the next two or three" because "there is just too much capacity coming on line."
Tanghal added that AMAT acquisition Baccini "is doing extremely well, but we are being very cautious -- we don't think it's going to be sustained next year," adding that "$1.05 per watt crystalline silicon costs will happen."
Regarding venture capital investing, Tanghal was simililarly pessimistic, saying, "The dollars are not going to California companies -- their valuations are too high and they haven't achieved what they promised." The last deal that Applied Ventures did was Bti in Australia, which was covered by GTM here. She said that Bti, absent a robust venture capital community in Australia, performed with revenues and was the "more attractive investment."
Tanghal also stated that Applied Ventures, AMAT's VC arm, is looking at investments in reducing chemical use in industry and other industrial energy efficiency applications, as well as energy storage.
Here are AMAT's stronger-than-anticipated highlights from their recent quarter:
- Q4 orders of $3.03 billion, up 11 percent over Q3, led by solar and semiconductor equipment
- Gross margin was 42.2 percent in the recent quarter
- Net sales of $2.89 billion, up 15 percent over Q3
- Operating profit of $699 million
- For fiscal year 2010, the company reported orders of $10.25 billion, net sales of $9.55 billion, operating profit of $1.38 billion, and net income of $938 million or $0.70 per share.
- The fiscal year results included EES inventory-related charges of $330 million (SunFab a-Si) that lowered EPS by approximately $0.16.
- Guidance for next quarter: For the first quarter of fiscal 2011, Applied expects net sales to be down in the range of 8 percent to 15 percent quarter over quarter.
Energy and Environmental Solutions (EES, the solar group, amongst other things) had record orders of $546 million in the fourth quarter, up 55 percent from the third quarter, driven by demand for Baccini cell processing systems and PWS wafering systems. Net sales increased to $606 million, led by record net sales of Baccini and PWS systems, and included the sign-off of two SunFab thin film lines in China. EES had operating income of $86 million or 14 percent of net sales.
For the year, EES orders increased by 58 percent to $1.51 billion, net sales increased by 28 percent to $1.48 billion, and the operating loss increased to $466 million or 31 percent of net sales.
Applied Materials is the first equipment supplier to reach and exceed the $1 billion barrier for PV-specific trended Trailing Twelve Month (TTM) tool revenues, according to DisplaySearch.
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