By Senad Karaahmetovic
After the market close yesterday, Applied Materials (NASDAQ:AMAT) warned that it expects to incur a $400 million loss from export controls for this quarter and next.
Hence, AMAT cut its Q4 revenue outlook to $6.4 billion, plus or minus $250 million. The previous guidance called for $6.65 billion in Q4 sales, with AMAT expecting $150 million of supply chain upside for this quarter.
"The revised net sales outlook reflects the impact of the new export regulations partially offset by supply chain performance improvements," AMAT noted in a statement.
The company also sees adjusted EPS between $1.54 and $1.78, down from the prior outlook of $1.82 to $2.18. The consensus for adjusted EPS sits at $2.02.
Here's what some Wall Street analysts say about yesterday's warning:
Morgan Stanley analysts: "The magnitude of the miss seems reasonable, but we are a bit surprised that there is impact in the October quarter, as our understanding of the rules - confirmed by some of the semiconductor device manufacturers impacted by these events - is that the export controls are effective immediately, but do not impact tools that are already in transit to the customer."
Mizuho analysts: "We have noted WFE challenges with China restrictions and suppliers such as AMAT/LRCX likely the heaviest-hit, though longer term, we see AMAT well positioned with its market-leading portfolio benefiting from secular tailwinds in key technology transitions and increasing capital intensity and onshoring of manufacturing."
Wells Fargo analysts: "While clearly negative, we do not view this as a significant surprise. Our quick conversation with the company leaves us to consider AMAT’s estimated revenue impact as inclusive of not shipping to multi-national companies in China."
BofA analysts: "It is early days in sizing exact China headwinds, but AMAT's guide-down of 6% is in the 5%-10% range we expected prior. We expect peers KLAC to also be impacted, though by a lower 3-5% or $80-$130mn quarterly level… We estimate peer LRCX's exposure is likely greatest, closer to 7-8% of sales or $350-$400mn/quarter given its higher memory exposure."
Stifel analysts: "It would not surprise us if some companies in the short-term take an even more draconian approach (broadly suspending China exports) to ensure compliance with the new rules. To help comply with the spirit of the new laws, we believe the U.S. can provide better/expanded guidance to impacted suppliers."
AMAT stock is down about 1% in pre-market Thursday.