***SOMEONE DIDN”T GET THE RECESSION OVER MEMO****

Applied Materials May Cut 15% of Jobs, Analysts Say (Update2)

Nov. 11 (Bloomberg) — Applied Materials Inc., the largest maker of chip-production machinery, may be preparing to cut more jobs, a sign the company doesn’t expect the market to bounce back to pre-recession levels.

Analysts at Pacific Crest Securities, RBC Capital and Auriga USA LLC are predicting job cuts of as much as 15 percent when Applied releases fourth-quarter earnings today. That would amount to more than 1,500 jobs. The company is reducing its costs to adjust to a smaller industry, said Daniel Berenbaum, an Auriga analyst in New York.

“I expect them to try to size the company for the level of business going forward,” said Berenbaum, who recommends selling the stock. “The problem for Applied and the problem for semi equipment in general is that it’s highly unlikely that we’re going back to 2007 capital spending levels.”

Semiconductor companies will spend about $15 billion on manufacturing machinery this year, half the amount in 2008 and a fraction of 2007’s $43 billion tally, according to trade group Semiconductor Equipment and Materials International. While orders have begun to pick up again, some chip companies have gone bankrupt and others are shifting away from doing their own manufacturing. That means they don’t need Applied’s gear.

“For a few years at least, you have to think about this being a smaller market,” said Weston Twigg, a Pacific Crest analyst in Portland, Oregon. He has a “sector perform” rating on Applied’s stock. “2007 was a huge year. I don’t think we ever get back to those numbers.”

Analysts’ Estimates ……………………………………………

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