Semiconductor stocks wavered in afternoon trading Wednesday, but shares of some major chip testing companies fell following disappointing quarterly reports.
The Philadelphia Semiconductor Index edged up 0.74 points to 391.04 ahead of an anticipated interest rate cut by the Federal Reserve.
Meanwhile, shares of FEI Co. fell after the chip-testing company said its first-quarter profit dropped 45.7 percent on higher costs.
Chief Executive Don Kania said the company was undertaking a restructuring plan "in light of the challenging environment and weak U.S. dollar", noting that the company's profit margins were under pressure.
Brean, Murray, Carret & Co. analyst Mark Miller said in an investor note that the company met its profit guidance but said that its margins disappointed.
Shares of Hillsboro, Ore.-based FEI fell $2.03, or 8.5 percent, to $21.97. They have traded in the last year between $19.79 and $38.51.
Shares of FormFactor Inc. also fell heavily after the chip-testing company reported first-quarter earnings well below Wall Street expectations.
Oppenheimer & Co. analyst Gary Hsueh said in a note to investors that management is now "just a bystander as revenue continues to implode".
Hsueh was even less impressed with the company's second-quarter outlook.
"Despite claims of regaining market share...second-quarter outlook is even more dismal," he said.
FormFactor shares fell 82 cents, or 4.1 percent, to $19.25 in afternoon trading. They have traded in the last year between $16.17 and $48.48.
Lehman Brothers analyst Tim Luke wrote in a research note that the overall chip market appears mixed, with inventory levels down slightly in the first quarter but rising in key areas such as communication equipment. Rising inventory levels at customers' plants suggest a slow market for the product.
Luke cited Intel Corp. and Qualcomm Inc. as key stocks going into the summer.
Intel shares fell 8 cents to $22.54. Qualcomm shares fell 6 cents to $43.70.
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