What: Shares of Veeco Instruments (VECO +0.68%) have been on a wild ride over the past month, falling 12% in October only to climb 9% so far in November.
So what: The drop in Veeco's stock came almost entirely on October 29 when the company reported third quarter earnings. Revenue jumped 51% to $140.7 million and earnings of $0.33 per share even beat expectations. But guidance of $90 million to $110 million in revenue for the fourth quarter and news that bookings were just $52 million sent the stock into a tailspin.
While the drop was understandable at the time, shares have come back in part because investors know that this is just the price of being in the equipment supply business. There will be boom quarters and down quarters depending on how quickly manufacturers are expanding, and right now that growth is slowing.
Now what: Long-term, Veeco is in a decent position providing equipment to LED manufacturers, a big growth industry. But orders can come in lumps, and that's what investors are seeing today.
While I don't see a single quarter's guidance as something worth panicking over, I'd like to see some more consistency and profitability from Veeco before jumping into the stock. The company has lost $22.2 million so far this year, even after last quarter's earnings beat, and that's not a financial result I'll be chasing with orders heading lower to end the year.
