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Q3 2012 Earnings Call
October 25, 2012 10:00 am ET
Andrew J. Blanchard - Vice President of Corporate Relations
Michael A. Bradley - Chief Executive Officer, President and Executive Director
Gregory R. Beecher - Chief Financial Officer, Principal Accounting Officer, Vice President and Treasurer
Weston Twigg - Pacific Crest Securities, Inc., Research Division
Krish Sankar - BofA Merrill Lynch, Research Division
James Covello - Goldman Sachs Group Inc., Research Division
Stephen Chin - UBS Investment Bank, Research Division
Christopher J. Muse - Barclays Capital, Research Division
Satya Kumar - Crédit Suisse AG, Research Division
Vishal Shah - Deutsche Bank AG, Research Division
Mehdi Hosseini - Susquehanna Financial Group, LLLP, Research Division
Jagadish K. Iyer - Piper Jaffray Companies, Research Division
Terence R. Whalen - Citigroup Inc, Research Division
Previous Statements by TER
» Teradyne Management Discusses Q2 2012 Results - Earnings Call Transcript
» Teradyne's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Teradyne's CEO Discusses Q4 2011 Results - Earnings Call Transcript
Andrew J. Blanchard
Thank you, Andrea. 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; and our Chief Financial Officer, Greg Beecher. Following our opening remarks, we'll provide details of our performance for the third quarter of 2012, as well as our outlook for the fourth quarter.
First, I'd like to address several administrative issues. The press release containing our third quarter results was sent out via business letters[ph] last evening. Copies are available at teradyne.com, where this call is also being simulcast.
Note that during this call, we're providing slides on the website that may be helpful to you in following the discussion. To view them, simply access the Investor page of the site, and click on the Live Webcast icon. In addition, replays of this call will be available via the same page about 24 hours after the call ends. The replay will be available along with the slides through November 11.
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 will make reference 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 where available on our website. To view them, go to the Investor page and click on the GAAP to non-GAAP reconciliation link. Also, you may want to note that between now and our next conference call, Teradyne will be participating in investor conferences hosted by Piper Jaffray, UBS and Credit 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 in the third quarter and provide our outlook for the fourth quarter. Then, our CFO Greg Beecher will provide more details on our quarterly performance along with our guidance for the fourth 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. Thanks for being with us on the call this morning. I'd like to cover 3 things with you today, so that I'll address a range of short and longer-term questions that I suspect are on your mind.
The first is a brief recap of the last quarter, which has a solid set of numbers as you've seen; second is a comment on the sharp downturn in bookings that are linked to both seasonal and program buying trends; and third is to give you a first look over the horizon in 2013.
Anytime our industry has a slowdown, there are questions around what's temporary and what's permanent in nature. So I want to give you our perspective on that. And looking out into 2013 is the best way to see through the step down in the short-term environment. So a quick recap of the third quarter starts with better top and bottom line performance in the high end of our guidance range. SemiTest revenues were down 15% from Q2, in line with our expectations after a very strong first half. LitePoint posted back-to-back revenue records in the last 2 quarters, and our Systems Test business was steady in commercial board test and defense, but dropped sharply in storage test after a record first half and as worldwide HDD test utilization fell off.
Bookings in all sectors saw a significant seasonal or program buying declines. And SemiTest bookings fell 60% from second quarter levels, a sharper reset than we usually have, but actually not out of line with the cumulative numbers we saw in our peak-to-trough pattern last year.
You'll recall that SemiTest bookings dropped in Q3 last year to about $200 million, following 2 quarters that averaged $310 million. This year, the drop to $154 million comes after 2 quarters that averaged $360 million. So it's not surprising to go a little bit deeper after a higher sustained peak. As you might expect, all SOC sectors saw sequential order declines, but mobility-related products from power management ICs to mobile processors continued as our strongest segments.