Teradyne, Inc. (TER)

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Teradyne Inc. (TER)

Q3 2009 Earnings Call

October 29, 2009 10:00 am ET


Andy Blanchard - VP of Corporate Relations

Mike Bradley - CEO

Greg Beecher - CFO


CJ Muse - Barclays Capital

Jim Covello -Goldman Sachs

Gary Hsueh - Oppenheimer

Krish Sankar - Bank of America-Merrill Lynch

Vis Vellore - Credit Suisse

David Duley - Steelhead Security

Patrick Ho - Stifel Nicolaus

Jagadish Iyer - Arete Research

Krish Sankar - Bank of America-Merrill Lynch

Robert Weaver - Forest Investments

Raj Seth - Cowen & Company

Atif Malik - Morgan Stanley



Good morning. My name is Molly and I will be your conference operator today. At this time I would like to welcome everyone to the Q3 Teradyne Earnings Call. (Operator Instructions). Thank you. Mr. Blanchard, you may begin your conference.

Andy Blanchard

Thank you, Molly. Good morning, everyone and welcome to our discussion of Teradynes most recent financial results. Im joined this morning by our Chief Executive Officer, Mike Bradley and our Chief Financial Officer, Greg Beecher. Following our opening remarks, we will provide details of our performance for the third quarter of 2009 as well as our outlook for the fourth quarter.

First, I would like to address several administrative issues. The press release containing our most recent financial results was sent out via Business Wire last evening. Copies are available on our website or by calling our Teradynes Corporate Relations office by 978-370-2221.

This call is being simultaneously webcast over our website at teradyne.com. Note that during this call, we are providing slides on the website that may be helpful to you in following the discussion. To view them, simply access the investor portion of our site and click on Live Web Cast followed by Click Here for webcast. In addition, replays of this call will be available via our website starting approximately 24 hours after the call ends. You will find it by going to teradyne.com and click on Investors. The replays will be available along with the slides through November 13, 2009.

The matters that we discuss today will include forward-looking statements that involve risk factors that could cause Teradynes results to differ materially from managements 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 do not take any obligation to update them as a result of developments occurring after this call.

During todays call, we will make references to non-GAAP financial measures. We have posted additional information concerning these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP financial measure that is available on our website.

To view them, go to investor portion of our website and click on the GAAP to non-GAAP reconciliation link. Also, you may want to note that between now and our next conference, Teradyne will be participating in the Sidoti & Co. New York Emerging Growth Conference on November 20, the Credit Suisse First Boston Technology Conference in Phoenix on December 2 and, the Barclays Global Technology Conference in San Francisco on December 9, and Eric May luncheons in Chicago, Boston and New York on November 11, December 14 and 15 respectively.

Now, lets get on with the rest of the agenda. First, our CEO, Mike Bradley will review the state of the company in the industry in the third quarter of 2009 and review the outlook for the fourth quarter. Then our CFO, Greg Beecher will provide more details on our financial performance in the third quarter and our guidance for the fourth quarter of 2009. We will then answer your questions. For scheduling purposes, you should know we intend to end this call after one hour. Mike?

Mike Bradley

Thanks, Andy. Good morning, everyone. Thank you for joining us today. I want to focus my comments this morning in three areas. First is the momentum we were seeing in our semiconductor test business, second is the important milestone weve achieved in the high-speed memory market, and third is the increasing strength of our System Test Group, which is contributed to the trajectory of our recovery from the trough of this cycle just six months ago.

Later, Greg will take you through the financials where you can see the positive affects of our cost controls and our balance sheet initiatives. He will also outline our financial model going forward including hard disk drive and high-speed memory, which weve added to the portfolio.

Let me start with the semi test side of the house. Last quarter you will recall our overall semi test booking doubled from the level of Q1. In this third quarter, we topped the Q2 total with bookings of just over $230 million or about a 70% growth over the second quarter. Our IDM and fabless specifiers led the way with bookings more than double the level of Q2.

The OSAT business totaled about $50 million, equal to our second quarter order rate. So, both customer segments have more than tripled since the low levels of six months ago. From a device segment perspective, we saw very strong growth in power management applications, while our wireless business was still strong it was complimented by micro controller, storage and analog segments, which posted healthy growth in the second quarter.

Within these numbers, we are pleased with the upsurge in business from our Eagle Test product line, which recorded its strongest bookings quarter in a number of years. New demand for automotive and image sensor systems remains below our historical levels, so weve clearly got some segments that will add to our totals as the recovery broadens.

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