) reported third-quarter 2013 earnings of 46 cents per share,
beating the Zacks Consensus Estimate of 44 cents. Adjusted
earnings per share exclude one-time items but include stock-based
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Revenues of $433.4 million were up 1.0% sequentially but down
6.5% year over year and just beat the lower end of management's
guided range of $425.0 million-$465.0 million.
Around 70.2% of revenues in the quarter came from semiconductor
testing platforms, 8.3% from system testing and the remaining
21.5% from wireless testing business.
Total bookings in the quarter amounted to $271.0 million, of
which $207.0 million were in Semiconductor Test, $40.0 million in
Wireless Test and $24.0 million in the Systems Test Group.
Total orders were down 42.8% sequentially, consistent with
Reported gross margin for the quarter was 58.7%, up 250 basis
points (bps) sequentially as well as year over year due to
Operating expenses of $160.8 million were up 5.7% from $152.1
million in the year-ago quarter. The reported operating margin
was 21.6%, down 170 bps from 23.3% in the year-ago quarter. Both
engineering and development (E&D) expenses and selling and
administrative (S&A) expenses increased as a percentage of
The quarter's GAAP net income was $69.5 million or earnings of 29
cents per share, down from $88.6 million or 39 cents in the
comparable quarter last year. Excluding special items but
including stock-based compensation expense, non-GAAP net income
was $95.0 million or 46 cents per share compared with $108.4
million or 53 cents a share in the year-ago quarter.
The company ended the third quarter with cash and cash
equivalents, and marketable securities balance of $957.2 million,
up from $728.7 million in the prior quarter. Trade receivables
were $209.4 million, down from $228.2 million in the prior
Cash flow from operations was $154.5 million versus $249.0
million in the year-ago quarter. Capex was $32.1 million versus
$33.3 million in the year-ago quarter.
Management provided guidance for the fourth quarter of 2013.
Revenues are expected to be in the range of $260 million-$285
million, down 37.1% sequentially at the mid-point. Non-GAAP
earnings from continuing operations are expected to be in the
range of 0 to 7 cents a share and GAAP earnings are expected to
be 4 cents to 8 cents per share.
Teradyne's third-quarter earnings exceeded the Zacks Consensus
Estimate on lower-than-expected operating expenses.
The company reported weak orders and also provided conservative
fourth-quarter revenue guidance, indicating low visibility and
weak demand for Teradyne products in the future. Though
Teradyne's new products related to mobile phones fared well in
the quarter, storage test lines were impacted by weak PC demand.
Management believes the addition of LitePoint to be a positive,
going ahead, and expects the wireless device test market which it
serves to grow 25%-30%. However, the SoC tester market is
expected to be down 25% while the memory market remains flat.
These factors are not indicative of much growth this year.
In the near term, we expect the shares to remain under pressure
due to weakness in key end markets. Currently, Teradyne has a
Zacks Rank #4 (Sell).
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