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Q3 2013 Earnings Call
October 24, 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
John W. Pitzer - Crédit Suisse AG, Research Division
Timothy M. Arcuri - Cowen and Company, LLC, Research Division
James Covello - Goldman Sachs Group Inc., Research Division
Jagadish K. Iyer - Piper Jaffray Companies, Research Division
Mehdi Hosseini - Susquehanna Financial Group, LLLP, Research Division
Krish Sankar - BofA Merrill Lynch, Research Division
Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division
Chad Dillard - Deutsche Bank AG, Research Division
Mahavir Sanghavi - UBS Investment Bank, Research Division
Jairam Nathan - Sidoti & Company, LLC
Thomas Diffely - D.A. Davidson & Co., Research Division
Previous Statements by TER
» Teradyne, Inc. (TER) Management Discusses Q2 2013 Results - Earnings Call Transcript
» Teradyne Management Discusses Q1 2013 Results - Earnings Call Transcript
» Teradyne Management Discusses Q4 2012 Results - Earnings Call Transcript
Andrew J. Blanchard
Thank you, Angel. 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; President, Mark Jagiela; and our Chief Financial Officer, Greg Beecher. Following our opening remarks, we'll provide details of our performance for the third quarter, as well as our outlook for the fourth quarter of this year.
First, I'd like to address several administrative issues. The press release containing our third quarter results was issued last evening. Copies are available at teradyne.com, where this call is also being simulcast. We're providing slides on the Investor page of the website that may be helpful to you on following the discussion. Those slides can also be downloaded, or you can follow along live. If you don't see the download icon, just simply refresh your page. In addition, replays of this call will be available via the same page about 24 hours after the call ends.
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 reference to non-GAAP financial measures. We have posted additional information concerning those non-GAAP financial measures, including reconciliation to the most directly comparable GAAP financial measure, where available on the Investor page of the website.
Also between now and our next conference call, Teradyne will be participating in an investor conference hosted by UBS and Crédit Suisse.
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 for the third quarter and provide our outlook for the fourth quarter of 2013. Then, Greg Beecher will provide more details on our quarterly performance, along with our guidance for the fourth quarter. Mark Jagiela will then provide a short overview of some of the technology trends impacting the business. We'll then answer your questions, and you should note that we intend to end this call after 1 hour. Mike?
Michael A. Bradley
Good morning, everyone. Thanks for being with us again today. Let me start with what's been challenging about this year, then I'll give you the rundown on how we're navigating in this climate and how we expect we'll do to the full 12 months of the year. By challenging, I mean that the SOC test market will be down about 25% this year. The memory market will be roughly flat and the wireless device test market that LitePoint serves will be off 25% to 30%. Add to that, a dramatic CapEx reduction in the hard disk drive market for the last 6 quarters, and you get as tight a capital spending environment as we've seen in quite some time. The Semiconductor Test markets, which are tracked closely, prove this point.
The SOC test market will bottom at under $400 million in revenues in Q4 and close the year at just under $2 billion in total. And the memory test market will drop slightly in Q4 at an annualized run rate of just under $500 million. While our prior projections for the full year in these markets have called for reduced capital spend rates, the actuals will come in around the low end of our projections. So that's been the challenge.
But despite this environment, we'll post some very good results in 3 respects. First, we expect to, again deliver above-model performance for the full year despite the annual revenues that will be down about 15%. The hallmark of our performance over numerous cycles is our ability to deliver good results over the cycle, independent of the ongoing market volatility. Second, we'll post sales at the trough that are slightly better than last year, even though the market trough is deeper this time. And third, we'll have improved our market share position in our 3 major serve markets over last year. Obviously, this third element is a key to having very good results in what's been a tight capital spending environment.