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AMAT's earnings off a wee bit, but check out its new financial reporting structure |
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Nov 16, 2006 at 10:13 AM |
That loveable big ape of the semiconductor capital equipment market, Applied Materials, released its quarterly earnings yesterday afternoon.
Interesting coincidence that the leading tool supplier to the chipmakers would announce its financials less than 24 hours before the SIA's forecast, but I digress. The sales figures---$2.52 billion---were a bit off from last quarter though still significantly better than Q405, and income---$449 million---also lagged last quarter but was way up (82%) year over year.
Tucked inside the release was an interesting tidbit about how AMAT has changed its "internal financial reporting structure," dividing the company into four segments: silicon, fab solutions, display, and the oddly monikered "adjacent technologies" unit. Not "emerging" (too cliche), not "early-stage" (too weak sounding), not "miscellaneous" (too generic), not "new" or "novel" (even though they are "new" and "novel" to Applied), but "adjacent," as in nearby, neighboring, adjoining or, in the mathematical sense, sharing an edge.
The markets/products of the first three segments are fairly self-evident: silicon = chip tools, fab solutions (great double-entendre, as in "fabulous solutions") = parts management, support, EHS, etc., and display = FPD-making tools. So what goodies are included in the "adjacent" segment? The manufacturing, sales, and service of equipment used to make solar photovoltaic sales, flexible electronics, and energy-efficient glass.
The quarterly sales broken down by segment goes like this: silicon, $1.61 billion; fab solutions, $590 million; display, $296 million; and adjacent, $20 million.
So while these new adjacent technologies may share that killer AMAT brand with the other three segments, they have a very long way to go to get close to the revenue streams and profit margins generated by the more established groups.
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