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Applied Materials sees falling solar sales to add to PC woes

(Reuters) - Chipmaker Applied Materials projected a dismal fourth quarter, mirroring concerns that slowing chip sales and a glut in the solar cell market is hurting growth, and said it will clip capacity in the near term, in line with suppressed demand.

The World's largest chip-fab equipment maker is the latest to join the list of technology companies raising red flags about broader economic slowdown clouding results.

Applied said lower average selling price for silicon wafers and overcapacity at customers' plants, will hurt demand.

The company said in a call it was planning selective factory shutdowns in the fourth quarter, with more broad-based shut downs in the first quarter of 2012.

Santa Clara, California-based Applied said it expects fourth-quarter revenue to fall 15-30 percent, implying sales of $1.95-$2.37 billion, below $2.57 billion expected by analysts.

SOLAR SLOWS

"In the energy and environmental solutions segment, orders declined 48 percent," the company said.

"Our solar business is now seeing an investment slowdown."

Subsidy cuts in Europe earlier this year triggered a global glut of solar panels and drove down prices sharply, denting profits and stock prices at leading solar manufacturers.

Applied had been pouring resources into the fast-growing solar and LED markets. Last year, it wound down an unprofitable thin-film solar power business to focus on crystalline silicon solar equipment.

Earlier this year, the company agreed to buy Varian Semiconductor Equipment Associates Inc for $4.9 billion to beef up its solar-cell business.

The company said it expects fourth-quarter adjusted earnings of 16-24 cents a share, while analysts polled by Thomson Reuters I/B/E/S, on average, were looking for 30 cents a share.

PC DISAPPOINTS

Chip-equipment makers have been experiencing slowing demand as semiconductor makers cut down on orders on bleak sales outlook for PC and industrial equipment.

"In semiconductor, back-to-school PC sales have been disappointing," the company said.

Analysts expect the company's foundry customers, including contract chip manufacturer Taiwan Semiconductor Manufacturing Co Ltd, to go slow on or entirely hold capacity expansion, anticipating a decline in orders.

Average worldwide bookings for semiconductor equipment declined 16 percent -- the largest in over a year -- in July, according to Semiconductor Equipment and Materials International.

Earlier this month, Tokyo Electron, the world's No.2 supplier of chipmaking equipment, slashed its annual forecast by half, saying that investment by makers of chips used in PCs, smartphones and tablets had stalled.

Applied shares were trading at $10.70 after the bell. They had closed at $11.36 on Wednesday on Nasdaq.

(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Joyjeet Das)

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