What happened

Shares of Electro Scientific Industries (NASDAQ:ESIO) have plunged today, down by 18% as of 1:15 p.m. EST, after the company reported fiscal third-quarter earnings. Despite it proclaiming that the results were "strong," investors were not impressed.

So what

Revenue in the fiscal third quarter came in at $110.8 million, with GAAP net income of $34 million, or $0.94 per share. On a non-GAAP basis, net income was $35.6 million, or $0.99 per share. The company has now completed its cost-reduction strategy, leading to GAAP gross margin expanding from 33.9% a year ago to 48% last quarter.

Laser drilling in a CNC machine

Image source: Getty Images.

Total orders in the third quarter were $134 million, which CEO Michael Burger said was due to consumer electronics products becoming more complex, requiring greater flexible circuit content per device.

Now what

"We delivered another quarter of excellent financial results. I'm particularly proud of the entire ESI team as they demonstrated the power of our highly scalable cost model by shipping a record amount of product, resulting in dramatic increases in revenue and profitability, Burger said in a statement. "Our non-GAAP gross margin rate of nearly 49% enabled adjusted operating margin of over 32% and adjusted quarterly earnings of nearly $1.00 per share."

In terms of guidance for the fiscal fourth quarter, Electro Scientific expects revenue to be in the range of $95 million to $110 million, with non-GAAP earnings per share of $0.75 to $0.95.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.