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Teradyne, Inc. (TER)
Q2 2013 Earnings Call
July 25, 2013 10:00 am ET
Andrew J. Blanchard - Vice President of Corporate Relations
Michael A. Bradley - Chief Executive Officer and Executive Director
Gregory R. Beecher - Chief Financial Officer, Principal Accounting Officer, Vice President and Treasurer
Mark E. Jagiela - President
Timothy M. Arcuri - Cowen and Company, LLC, Research Division
Krish Sankar - BofA Merrill Lynch, Research Division
Mehdi Hosseini - Susquehanna Financial Group, LLLP, Research Division
Mark Delaney - Goldman Sachs Group Inc., Research Division
Mahavir Sanghavi - UBS Investment Bank, Research Division
Chad Dillard - Deutsche Bank AG, Research Division
Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division
Jagadish K. Iyer - Piper Jaffray Companies, Research Division
Previous Statements by TER
» Teradyne Management Discusses Q1 2013 Results - Earnings Call Transcript
» Teradyne Management Discusses Q4 2012 Results - Earnings Call Transcript
» Teradyne Management Discusses Q3 2012 Results - Earnings Call Transcript
Andrew J. Blanchard
Thank you, Endrica. Good morning, everyone, and welcome to our discussion of Teradyne's most recent financial results. I'm joined this morning by our Chief Executive Officer, Mike Bradley; Mark Jagiela, our President; and our Chief Financial Officer, Greg Beecher. Following our opening remarks, we'll provide details of our performance for the second quarter, as well as our outlook for the third quarter of this year.
First, I'd like to address several administrative issues. Press release containing our second quarter results was issued last evening. Copies are also available at teradyne.com, where this call is also being simulcast. We're providing slides on the Investor page of this website that may be helpful to you on following the discussion. In addition, replays of this call will be available via the same page about 24 hours after the call ends and the replays will be available, along with the slides, through August 10.
The matters that we discuss today will include forward-looking statements that involve risk factors that could cause Teradyne's results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release, as well as our most recent SEC filings for a complete description.
Additionally, those forward-looking statements are made as of today, and we take no obligation to update them as a result of developments occurring after this call. During today's call, we'll make references to non-GAAP financial measures. Additional information concerning these non-GAAP financial missions, including reconciliation to the most directly comparable GAAP financial measure, were available in our website. To view them, go to the Investor page and click on the GAAP to non-GAAP Reconciliation link.
Also, between now and our next conference call, Teradyne will be participating investor conferences hosted by Piper Jaffray, Pacific Crest, Citibank and Deutsche Bank.
Now let's get on with the rest of the agenda. First, our CEO, Mike Bradley, will review the state of the company and the industry of the second quarter and provide our outlook for the third quarter of 2013. Then our CFO, Greg Beecher, will provide more details on our quarterly performance, along with our guidance for the third quarter. We'll then answer your questions. You should note that we intend to end this call after 1 hour. Mike?
Michael A. Bradley
Good morning, everyone, and thanks for being with us again today. As you can see from our release last night, we posted solid results in the second quarter and we're guiding revenues and profits up slightly in the third quarter. The seasonal pattern in the Semiconductor Test cycle gets some of the credit for the uplift so far this year. But we've also had good market share momentum in SemiTest, both SOC and memory, as well as a strong first half showing from LitePoint. We're well above our operating profit model on the quarter and have also now exceeded that model for the first 6 months of the year, offsetting the naturally slower start to the year that we saw. On the longer arc, this is the 16th straight quarter within the black results for us and that's despite the roller coaster of demand that characterizes most of our markets.
I should also note that, as outlined coming into the year, we're increasing our R&D investments for long-term growth, so these first half results show the continued resiliency of our model. I'd remind you that we're operating in a CapEx environment that is lower than last year due to less robust spending for mobility applications, which affects both our SemiTest and LitePoint business units. The SOC test market is running about $400 million below the first half numbers of last year, so we continue to expect a lower overall SOC test market for the full year, closer to the low end of the $2.2 billion to $2.4 billion we've outlined in our last 2 calls.
Our momentum in SOC test is very good as we've registered back-to-back increases of nearly 40% in bookings through the first 2 quarters of the year. Wireless and power management continue as bright spots, coupled with a very strong surge in microcontroller and digital probe applications. You'll recall that we've introduced the new model of our J750 test system with higher frequency and pin count this year. That new model is up and running and helped us post our best J750 order rate in 3 years and our second highest quarterly total in over 8 years.