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Applied Materials slashes outlook

SAN FRANCISCO (MarketWatch) -- Shares of Applied Materials fell Tuesday after the company cut its fiscal year sales outlook citing a slump in demand for chip-making equipment.

Applied (AMAT) shares lost 2.7% to close at $10.71 after the Santa Clara, Calif.-based semiconductor capital equipment company said it expects revenue for the year ending in October to fall below its stated outlook of $9.1 billion to $9.5 billion.

Applied also expects adjusted earnings to fall short of its previous range of 85 cents to 95 cents a share. The company said it estimates that the "demand changes" could have an impact of 15 cents to 20 cents a share on the company's full-year adjusted earnings-per-share results.

Applied pointed to "weaker than expected near-term demand in its semiconductor equipment business, primarily among foundry customers."

The company said it will provide a new target range during its next earnings call on Aug. 15. Applied did say that it expects its fiscal third-quarter results for the period ending July 29 to be within its earlier forecast.

Applied's announcement follows Advanced Micro Devices(AMD) pre-announcement that it also expects weaker-than-expected revenue due to a slump in demand.

Shares of AMD ended 11% lower.