Applied Materials rises on solar power deal
By Benjamin Pimentel, MarketWatch
Last update: 1:43 p.m. EST March 4, 2008Print E-mail RSS Disable Live Quotes
SAN FRANCISCO (MarketWatch) -- Applied Materials Inc. was a ray of sunshine on a gloomy trading session as its shares rose more than 5% after the company unveiled a $1.9 billion solar power deal.
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AMAT 19.97, +1.09, +5.8%) on Tuesday announced it had signed agreements to supply and install equipment for "multiple solar factories" for an unnamed private corporation based outside the United States.
Analyst Timothy Arcuri of Citigroup said the plan is part of a major project in Suzhou, China, "that includes wealthy individuals related to the solar industry, a big component of government sponsorship and may also include some existing solar ventures."
"This is about 5 times larger than any order or project Applied Materials has ever received," he said in a research note.
He added, "At $1.9 billion, this project is even larger than our expectations of $1.3-$1.5 billion and appears to also include a service component as well."
The deals, which the company disclosed in a filing with the U.S. Securities and Exchange Commission, triggered a rally for Applied Material's stock even as the rest of the sector declined.
The announcement also highlighted growing optimism surrounding the Santa Clara, Calif.-based tech giant's solar power business. Applied Materials has steadily been expanding into the market for tools to make panels that general solar electricity.
Net sales for its energy and environment solutions group, which covers that business, more than tripled year-over-year to $122 million in the company's fiscal first quarter, even as the chip-equipment maker reported a 35% drop in profit due to the overall weakness in the semiconductor industry
