What: Shares of Veeco Instruments (VECO +0.19%), a provider of thin film equipment used in the manufacture of semiconductors and other products, slumped on Thursday following the company's third-quarter earnings report. While Veeco's results were mixed, guidance for the fourth quarter was weak, sending the stock down about 18% by 11:30 a.m. Thursday.
So what: Veeco reported quarterly revenue of $140.7 million, up 51% year-over-year, but about $4.5 million shy of the average analyst estimate. The company beat analyst expectations for earnings, reporting non-GAAP EPS of $0.33, which was $0.03 higher than the average analyst estimate. On a GAAP basis, EPS came in at $0.13, up from a loss of $0.35 during the same period last year.
While Veeco's results were mixed for the third quarter, investors punished the stock due to the company's guidance. Veeco expects revenue to be between $90 million and $110 million during the fourth quarter, a big sequential decline and a year-over-year decrease of about 12% at the midpoint of that range. Analysts were expecting fourth-quarter revenue of $152.6 million.
Veeco also expects non-GAAP EPS to deteriorate, with the company's guidance calling for a range of ($0.12) to $0.07. Analysts were expecting EPS of $0.37, well above Veeco's outlook.
Now what: CEO John Peeler pointed to a deterioration of business conditions in the final weeks of the third quarter, a situation that reduced the company's bookings to just $52 million for the quarter, well below the company's expectations. "Customers delayed their MOCVD investments amid ongoing economic uncertainty in China and weak LED demand for TV display backlighting," Peeler said. "We cannot accurately predict the duration of this MOCVD investment pause. However, demand for LED lighting remains healthy, which gives us confidence that investments will resume once industry conditions improve. We will continue to actively manage those things within our control through this period of uncertainty."
Like all semiconductor equipment companies, Veeco is at the mercy of demand from its major customers, which can fluctuate wildly at times. While the company's guidance for the fourth quarter was terrible compared to analyst expectations, these types of swings aren't out of line for this industry. Veeco did launch a $100 million share buyback in an attempt to provide some good news for investors, but the move seemed to fall on deaf ears.
