Applied Materials (NSDQ: AMAT) will enact multi-week shutdowns on its factories and doesn't expect to sign new contracts for solar equipment in the next few quarters, said Applied Materials CEO Mike Splinter Tuesday.

The company is carrying out more cost-cutting measures than it had announced last November, when the financial market crisis was in the early stage of ballooning. When the crisis will end is still difficult to foresee, Splinter said.

"We are planning for a prolonged period of weakness. We are still in the early days of this crisis. There is much we will still learn over the next year," said Splinter over a conference call with financial analysts to discuss the company's quarterly earnings.

Applied Materials, based in Santa Clara, Calif., jumped into the solar equipment market in 2006 and now sells machines for making crystalline silicon panels, as well as thin-film panels using amorphous silicon or a combination of amorphous silicon and microcrystalline silicon. The company has been a long-time developer of factory equipment for making integrated circuits and display panels.

The economic downturn has impacted all of its business segments. Applied doesn't expect to see new contracts signed for solar equipment for a few quarters, maybe even until 2010, Splinter said.

Some of the company's thin-film customers have had trouble lining up money to pay for their orders, said George Davis, Applied's chief financial officer, who didn't name those customers.

Applied executives said they still see solar as a strong opportunity for the company's growth. But the company has reduced its investment in its Energy and Environmental Solutions division, since the fourth quarter of fiscal 2008, Davis said. This division is responsible for solar technology development

The company plans to lay off more employees during this fiscal year than it had expected back in November, when it said it would cut its global workforce by 12 percent, or 1,800 positions, by the end of the current fiscal year. Davis said the reduction will be more than 2,000 positions, or 14 percent of the head count as of the end of its last fiscal year.

Applied has been carrying out multi-week shutdowns of its factories in the past two quarters, and it plans to continue to do so in the second and third fiscal quarter. That move would save the company as much as $40 million in labor costs per quarter, Davis said.

Applied executives also will be taking pay cuts and forgoing bonuses this fiscal year, said Splinter, who didn't provide details of the pay cuts.

The company reported that its quarterly financial results were in line with what it had stated just last week. Applied Materials posted a net loss of $133 million, or 10 cents per share, for its first fiscal quarter ending Jan. 25, compared with a net income of $262.38 million, or 19 cents per share, for the first fiscal quarter of 2008.

The company said a one-time charge of $133 million for carrying out its initial layoff plan announced last November contributed to the net loss.

Applied generated $1.33 billion in sales, down roughly 36 percent from $2.09 billion in the same period a year ago.

The company isn't providing sales or other types of outlook for the next quarter. Davis said the company expects its overall revenue to drop 30 percent quarter-over-quarter. That decline would involve all business divisions, though it would largely come from the chip and display divisions.

The company's shares declined about 3 percent to $9.39 per share in after-market trading.


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