Teradyne Warning Hits Chip Shares
SAN FRANCISCO, Oct 18 (Financial Times) - Shares of US chip equipment makers
fell yesterday as an earnings warning from Teradyne and analysts' downgrades of
Applied Materials added to concerns over growth rates in the sector.
Teradyne's stock plunged more than 30 per cent after the chip-testing group warned that fourth-quarter
earnings would come in well below expectations because of slowing demand, particularly from
Taiwan-based chip-testing houses.
George Chamillard, Teradyne chief executive, told analysts sales would fall between 2 and 4 per cent
from the previous quarter to about $800m, with earnings of between 66 and 67 cents a share. Analysts
had expected fourth-quarter sales of $920m and profits of 90 cents.
In mid-session trade, the company's stock was hovering around 52-week lows at $23.63.
The alert overshadowed Teradyne's robust third-quarter results, which saw the group's earnings soar
145 per cent, to beat Wall Street estimates by a cent.
The company said revenues rose 71 per cent to $848m from a year earlier.
Applied's stock fell more than 11.5 per cent after Credit Suisse First Boston lowered its earnings
estimate, saying semiconductor companies would be reviewing their capital expenditure budgets
because of slowing growth in demand from makers of personal computers and mobile phones.
Chase H&Q stepped up the pressure, downgrading Applied shares from "buy" to "market perform".
Sue Billat, semiconductor testing equipment sector analyst at Robertson Stephens, said the jury was still
out over whether the problems at Teradyne were industry-wide or company specific.
She added: "We know that 2000 was a good year for growth in the semiconductor industry but how
much longer can that cycle continue? That is the question on everybody's mind."
Analysts will now be watching Credence Systems, Teradyne's much smaller competitor in the
chip-testing arena, which is due to announce its earnings in the next few weeks.
To see more of Financial Times, go to ft.com. |
