Stifel Nicolaus & Co. analyst Patrick Ho was surprised, but not all that surprised, after chip manufacturing equipment maker Applied Materials Inc. released a worse-than-expected third-quarter outlook.
Applied expects a 15 to 25 percent reduction in third-quarter orders, a greater reduction than Ho anticipated.
"However, when examined more closely, we believe it is not completely a surprise," he said, noting that the company relied heavily on sales to Asian memory chip maker Hynix and many second-tier makers of DRAM memory chips, which are used to store information in personal computers.
Ho was encouraged by the company's progress in the solar chip business and believes its diversification strategy continues to buffer the company though a sharp decline in capital spending.
Chip companies have cut back on capital spending because of economic uncertainty.
Applied Materials shares rose 14 cents to $25.18.
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