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Applied Materials on Tuesday said its solar equipment revenues grew significantly for the fiscal third quarter, even as its overall business suffered a 65 percent drop in profits because of a sluggish semiconductor market.
The company also reported that the European Patent Office recently issued a provisional decision in favor of its customer, Sunfilm. Sunfilm had filed a complaint with the European Patent Office in March 2007 to dispute the validity of an Oerlikon Solar patent. Oerlikon, an Applied Materials rival in Switzerland, filed a patent-infringement claim against Sunfilm in a German court in June& this year, contending that Sunfilm in Germany was starting to make thin-film solar panels using the same Oerlikon patent without permission (see Oerlikon Solar Sues Sunfilm).
Although the patent office’s decision isn’t final, it’s a step toward removing a serious threat to Applied Materials, which began selling its thin-film equipment only last year. Even though Oerlikon didn’t sue Applied Materials, its legal action raised questions about Applied Materials’ technology and business prospects (See Incentives, Tech to Spark Debate at Intersolar: Thin Film).
“Our unique and proprietary structure doesn’t infringe that patent in the first place,” said Applied Materials CEO Mike Splinter in a conference call with analysts Tuesday.
The Santa Clara, Calif., company develops and sells equipment for making chips, flat panels, solar cells and panels. As the world’s largest maker of chip-manufacturing equipment, Applied Materials entered the solar business in 2006. It started by selling machines for making solar cells and panels using crystalline silicon. It launched thin-film equipment, called SunFab, in 2007 and has lined up four customers.
The company reported $165 million in net income, or 12 cents per share, for the third fiscal quarter, compared with $474 million, or 34 cents per share, from the year-ago period. It generated 1.85 billion in revenue for the third fiscal quarter, a 28 percent decline from $2.56 billion for the same quarter in 2007.
The company’s Energy and Environmental Solutions (EES) group, which includes equipment for making solar cells and panels as well as coating systems for flexible electronics, saw its sales grow five folds to $174 million in the third fiscal quarter from $29 million a year ago. It posted $85 million in sales for its second fiscal quarter of this year.
The EES segment also reported $322 million in new orders for the third fiscal quarter, up from $53 million in the year-ago period and $257 million from the second fiscal quarter of this year.
The demand for its solar equipment has helped boost sales for the company’s Applied Global Services segment, which sells equipment parts and services to help chip, flat-panel display and solar customers improve their factory operations. The segment reported a 1.3 percent increase in revenue to $607 million for the fiscal third quarter from $599 million from the same period in 2007.
The company expects the solar equipment business to grow in the fourth fiscal quarter while other business segments remain flat, said Chief Financial Officer George Davis. For fourth fiscal quarter, the company expects the revenue to go up 2 percent to 10 percent.
“Demand is significantly higher than supply at current time. Right now [Applied’s] customers are able to completely selling out their factories,” Splinter said.
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Because the thin-film business is new, the company doesn’t expect to profit from its SunFab line until the second half of fiscal 2009, Davis said.
Applied Materials, which released its earnings after the market closed, saw its shares increase 4.71 percent to reach $19.34 per share in after-market trading. The stock price closed up 0.05 percent at 18.47 per share.
Several other greentech companies also released earnings on Tuesday:
JA Solar (NSDQ: JASO)
JA Solar (NSDQ: JASO) shares grew 3 percent to $15.40 per share Tuesday even after the company posted a per-share loss.
The Chinese solar-cell manufacturer reported a second-quarter net income of 318.6 million yuan ($46.4 million), compared to 75.7 million yuan ($11 million) in the year-ago quarter. After adjusting for some one-time items, such as interest expenses and foreign currency gains, that amounted to a diluted net loss of 7 million yuan ($1 million), or 0.04 yuan (1 cent) per share, compared to an income of 0.54 yuan (8 cents) per share for the second quarter of 2007.
But excluding additional items, such as stock-based compensation, JA Solar reported an income of 0.99 yuan, or 14 cents, compared to 0.63 yuan, or 9 cents, for the same period last year. Analysts had expected earnings of 15 cents per share on revenue of $170.4 million, according to Thomson Financial.
JA Solar beat revenue expectations, posting revenue of 1.24 billion yuan ($180.3 million) for the quarter, compared with 457 million yuan ($66.6 million) last year.
Lazard Capital Markets analyst Sanjay Shrestha described the quarter as “solid,” while Piper Jaffray analyst Jesse Pichel characterized the operating results as “strong.” Both said the results were “masked” by some accounting items.
Investor attitude has apparently changed toward JA Solar. In the third quarter of last year, the company experienced falling shares even after beating earnings expectations (see JA Solar Gets No Reward From Investors).
Comverge (NSDQ: COMV)
Comverge (NSDQ: COMV), a demand-response company based in East Hanover, N.J., on Tuesday posted a second-quarter loss that more than doubled to $9.6 million, or 45 cents per share, from $4.4 million, or 29 cents per share, in the year-ago quarter
The loss came in spite of revenue that also more than doubled to $9.5 million from $4.6 million last year.
Analysts had expected a loss of 38 cents per share on revenue of $13.4 million, according to Thomson Financial.
The company said about $3 million in revenue “with solar gross margins” that it had expected to receive in the second quarter will end up being included in the third-quarter revenue instead because of a customer audit delay.
Comverge also warned that a regulatory change that grid operator PJM put into place in the first quarter would reduce its full-year revenue. It lowered its full-year guidance to between $80 million and $90 million, from a previous forecast of between $95 million and $105 million.
Shares of Comverge fell 26.7 percent to $6.55 per share Tuesday.
Other smart-grid companies reported better-than-expected quarterly results earlier this month (see Smart Grid Sales on the Rise and Sharp, SolarWorld, Wacker, Itron Beat Quarterly Expectations).
Metabolix (NSDQ: MBLX)
Metabolix (NSDQ: MBLX), a Cambridge, Mass.-based biotech company, on Tuesday posted a second-quarter net loss that widened 15.6 percent from the year-ago quarter.
The company reported a loss of $8.9 million, or 39 cents per share, compared to a net loss of $7.7 million, or 35 cents per share, in the second quarter of 2007.
Analysts expected a loss of 38 cents per share, according to Thomson Financial.
Second-quarter revenue, which included government grants, more than doubled to $401,000 from $187,000 last year.
But the company spent more on research and development – $6 million compared to $5 million in the year-ago quarter.
The earnings come a day after Metabolix announced it had engineered switchgrass plants that produce a bioplastic.
Metabolix shares grew 1.9 percent to $12.49 per share Tuesday, but fell 3.6 percent to $12.04 per share in after hours trading.