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Tuesday, February 12, 2008

Applied Materials (AMAT) Order Color

We expect orders of $2,100M (+/- $100M) for Jan-08. For April, we anticipate
orders to jump to $2,400M (+/- $100M) driven partly by previously announced
solar contracts. Other segments such as Silicon and Flat Panel are likely to
bounce along the bottom.
In April and July, we anticipate $500-800M in recognized orders from the solar
segment—but note that most of these were contracts booked in 2007.

We expect street to be surprised positively from 1FQ08 orders and 2FQ08 order
guidance. We expect January 1FQ08 orders to come significantly above the
guidance of down 5%-15% q/q due to strength in Flat Panel Display (FPD)
orders. While peers have guided March 1CQ08 orders down 10% or more, we
expect flat 2FQ08 orders guidance. We expect management's tone bullish due to
FPD strength and potential upside from solar segment. The stock would likely
trade higher after the call.

April Quarter Outlook: We expect the company to deliver a mixed outlook based
on strength in its FPD and solar, offset by continued weakness in its core semi
cap business. In terms of its bookings guidance, we would not be surprised to
see a range of +5% to -5% sequentially, as semi cap weakness (down 5-10%) is
offset somewhat by continued momentum in its FPD and solar businesses. At this
time, we are comfortable with our 2Q08 estimates of $2.1 billion in revenue and
pro forma EPS of $0.25, excluding options ($0.23, including options).

We expect AMAT to guide to total company order growth of flat to up 5% in
2Q08. We believe AMAT's silicon systems orders will be flat, flat panel and
adjacent technologies will be up 10%-15% and service will be down slightly.
We expect revenue guidance to be about flat with 1Q08 at $2.1 billion with EPS
of $0.21.
AMAT could suggest that 2008 global capex will be down 10%-15%, unchanged
from prior guidance. While not likely to improve materially near-term, we
expect AMAT to say industry orders have troughed.

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