Shares of Photronics Inc. (NASDAQ:PLAB) fell 12.6% Friday, after the semiconductor photomask manufacturer released disappointing preliminary fourth-quarter 2016 results.
Photronics isn't slated to hold its formal fourth-quarter call until Dec. 6. But in the meantime, the company now expects quarterly sales to be roughly $107 million, which should translate to earnings per diluted share of $0.02 to $0.03. By comparison, Photronics' previous guidance called for fourth-quarter revenue of $118 million to $128 million, and diluted earnings per share of $0.09 to $0.17.
Photronics CEO Peter Kirlin explained:
Unfortunately, the demand environment we encountered during our fourth quarter was weak across nearly all of our markets, resulting in sales below the guidance we provided in August. We had anticipated weak demand trends for both high end memory and high end FPD, with improvement in high end logic. However, the markets we projected to decline experienced more weakness than we anticipated, and the markets we expected to improve did not do so.
To be fair, Kirlin also noted that the company anticipates returning to sequential quarterly growth starting in the second quarter of 2017, especially as it begins taking delivery of new tools for FPD to increase capacity as demand ramps up for new AMOLED displays. And regarding longer-term growth, Kirlin reminded investors that construction is moving forward for Photronics' new IC photomask manufacturing facility in China.
But while Photronics' long-term story appears to remain intact, our fickle market hates being told to effectively hurry up and wait. As such, it's no surprise to see Photronics stock trading significantly lower today.