What happened

Shares of Veeco Instruments (VECO -4.71%), a leading manufacturer of semiconductor process equipment, were hit hard on Thursday. As of 12:44 p.m. EDT, the stock was down 15.1%.

The stock's decline follows Veeco's third-quarter earnings release. Bearishness toward the stock following the report is likely due to the company's worse-than-expected revenue for the period, as well as management's softer-than-anticipated outlook for fourth-quarter revenue.

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So what

Veeco reported non-GAAP earnings per share of $0.11 on revenue of $126.8 million. This compares to non-GAAP EPS and revenue of $0.05 and $129.3 million in the year-ago quarter, respectively.

Veeco's non-GAAP EPS came in above a consensus analyst estimate for $0.08. But revenue was below an average forecast for $135.5 million. 

Veeco CEO William Miller admitted in the company's third-quarter earnings release that the results were mixed, noting that revenue was below its guided range for the period "due to broader market softness in China across all of our businesses, as well as a US foundry putting its 7nm FinFET program on hold." But Miller pointed to a better-than-expected non-GAAP gross margin, which "led to non-GAAP operating income, net income and EPS all coming in at the high end of our guided ranges."

Now what

Veeco's guidance for fourth-quarter revenue between $85 to $105 million is significantly lower than the current consensus forecast for fourth-quarter revenue of $135 million. Even so, Miller said Veeco remains "encouraged by our growth prospects in compound semiconductor, advanced packaging and front-end semiconductor."