(Reuters) - Chip gear maker Applied Materials Inc (NASDAQ:AMAT) forecast second-quarter profit and revenue below analysts' estimates on Thursday, underscoring the weakness in the semiconductor industry that has forced some companies to temper their outlook.
Applied Materials said it expects current-quarter adjusted earnings between 62 and 70 cents per share and net sales in a range of $3.33 billion to $3.63 billion.
Analysts on average had expected the company to earn 76 cents per share on sales of $3.66 billion, according to IBES data from Refinitiv.
Investors are worried about a slowing smartphone market, especially in China, and its impact on chip demand. Both Apple Inc (NASDAQ:AAPL) and Samsung Electronics (KS:005930) Co Ltd have been hit by the U.S.-China trade dispute and a slowing Chinese economy.
"In the past quarter, there's been more negative than positive news with the whole industry facing challenges," Chief Executive Officer Gary Dickerson said on a post-earnings call.
Display equipment revenue in 2019 will decline by about a third from last year to record levels, Dickerson said.
Sales from its display business — which makes flat panel displays for televisions, PCs and smartphones — rose 14.4 percent to $507 million in the reported quarter.
Applied Materials, whose results are seen as a bellwether for the chip industry, said sales in its semiconductor business which accounts for most of its revenue fell a fifth to $2.27 billion in the reported quarter, but came in above FactSet estimates of $2.25 billion.
The company's net income rose to $771 million, or 80 cents per share, in the first quarter ended Jan. 27, from $165 million, or 15 cents per share, a year earlier.
On an adjusted basis, the company earned 81 cents per share. Net sales fell 10.7 percent to $3.75 billion.
Analysts had expected the company to earn 79 cents per share on sales of $3.71 billion.
The company's shares were down 1.6 percent at $40.07 in after-market trading.