Today: Shares in Santa Clara equipment maker Applied Materials get a boost after it reports big jump in profit, improved sales forecast. Also, Gilead stock soars after two Sovaldi-related victories.
The lead: Applied Materials benefitting from shift in tech production
Shares in Applied Materials surged Friday after it reported a big jump in profit and increased its sales outlook in Thursday's quarterly earnings report.
The Santa Clara company, the world's No. 1 maker of equipment used to produce chips, LCD displays and solar panels, rose 6.2 percent, or $1.32, to close the day at $22.47, about a dollar shy of its 52-week high, which it hit in July.
In its earning report, Applied Materials reported third quarter net income rose 79 percent, from $168 million, or 14 cents per share, a year ago to $301 million, at 24 cents per share. The company also said fourth-quarter sales may be better than expected, forecasting as much as $2.33 billion in sales, as opposed to analyst estimates of $2.28 billion.
Applied Materials is benefitting from a boom in mobile devices and flat-panel displays, which plays to the company's strengths, CEO Gary Dickerson said in a conference call Thursday. "We are in the middle of the biggest changes in semiconductor and display technologies in decades, and these major technology transitions are enabled by materials innovation," Dickerson said. "This plays directly to Applied's unique capability in precision materials engineering."
To keep up with the latest technology, PC and smartphone manufactures are upgrading their equipment, and AppMat is cashing in. The company predicts 10 to 20 percent growth in the chip-equipment market this year, Dickenson told Bloomberg News. "We really see 2015 is going to be even better," he added.
The emphasis on smartphones over PCs has also helped, a top AppMat executive said, as new models of phones create new sales patterns and a more steady demand for new LCD displays. "Our industry has become more seasonal than cyclical," chief financial officer Bob Halliday told the Wall Street Journal.
Applied Materials is poised to acquire even more market share by the end of the year, with plans to purchase a top rival, Japan-based equipment maker Tokyo Electron, in a $9.3 billion deal that is still pending regulatory approval.
SV150 market report: Gilead gains after pair of Sovaldi victories
The market took a sharp tumble Friday morning on word of excalating hostilities between Russia and Ukraine, but stocks recovered in the afternoon, closing almost even for the day. Tech stocks fared the best, with Applied Materials and Gilead Sciences leading the Nasdaq and SV150 to gains.
Gilead, the Foster City pharmaceutal company, scored a double victory Friday, winning a legal fight with rival Roche over patent rights to its Hepatitis C drug Sovaldi; the pricey drug also won approval for patient reimbursement from UK health-care regulators Shares surged 3.3 percent, or $3.13, to $99.49.
San Francisco video game maker Zynga jumped 2.1 percent, or 6 cents, to $2.91, despite reports that investors are losing patience with the company's direction. Los Gatos video-on-demand service Netflix rose 1.8 percent, or $8.22, to $450.09, a day after announcing a bid to take on HBO with a new slate of standup comedy specials. Apple gained 0.5 percent, or 48 cents, to $97.98, after reports that the Cupertino tech giant had started storing Chinese customers' iCloud data in China itself. Other tech companies, such as Google, have refused to store data in Chinese servers due to censorship and privacy concerns. Palo Alto electric car maker Tesla Motors closed at its fifth consecutive record high, up 0.2 percent, or 63 cents, to $262.01.
Hewlett Packard fell 1.5 percent, or 52 cents, to $35.07, as its bitter battle over alleged fraud in its 2011 purchase of Autonomy continues to be played out in the media. Facebook dropped 0.9 percent, or 67 cents, to $73.63, after announcing its vice president of product management, Sam Lessin, is leaving the company. On the flip side, "Ice Bucket Challenge" videos are proving to be a hit for the Menlo Park social network, with 1.2 million of the ALS-fundraising viral videos posted on Facebook, generating 15 million comments and likes.
Silicon Valley tech stocks
Up: Apple, Oracle, Intel, Gilead, VMware, Yahoo, Netflix, Zynga, LinkedIn, Tesla
Down: Google, Cisco, HP, eBay, Juniper, Facebook, Twitter
The SV150 index of Silicon Valley's biggest companies: Up 5.8, or 0.37 percent, to 1,570.62.
The tech-heavy Nasdaq composite index: Up 11.92 , or 0.27 percent, to 4,464.93.
The blue chip Dow Jones industrial average: Down 50.67 or 0.3 percent, to 16,662.91.
And the widely watched Standard & Poor's 500 index: Down 0.12, or 0.01 percent, to 1,955.06.
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Follow Mike Murphy on Twitter at twitter.com/mmmmurf