Shares of Teradyne, Inc. (TER) surged 8 percent in extended trading on Wednesday after the automated test-equipment maker strong earnings and revenue forecast for the first quarter, significantly above Street view. It also reported a profit for the fourth quarter that soared from last year, boosted by a significant income tax benefit. However, adjusted earnings per share more than halved, reflecting sharply lower margins and revenue drop.
"We saw an upturn in customer orders in our System-on-a-Chip (SOC) business and in all lines of our Systems Test Group in the fourth quarter. The new order increase was driven by very strong demand for leading-edge semiconductor testers for new mobile products and by a broadened storage test customer base," President and CEO Mike Bradley said in a statement.
The North Reading, Massachusetts-based company reported net income of $125.1 million or $0.56 per share for the fourth quarter, sharply higher than $60.1 million or $0.27 per share in the prior-year quarter.
Income from continuing operations for the quarter climbed to $125.08 million or $0.56 per share from $57.20 million or $0.25 per share in the year-ago quarter.
Excluding items, adjusted income from continuing operations for the quarter dropped to $30.3 million or $0.16 per share from $67.2 million or $0.34 per share in the year-ago quarter.
On average, 14 analysts polled by Thomson Reuters expected the company to earn $0.12 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Net revenue for the quarter decreased 4 percent to $296.99 million from $310.16 million in the same quarter last year. Twelve Wall Street analysts had a consensus revenue estimate of $284.75 million for the quarter.
Bookings in the fourth quarter were $376 million of which $233 million were in Semiconductor Test, $123 million in the Systems Test Group and $19 million in Wireless Test.
Gross margin for the quarter contracted 680 basis points to 45.9 percent from last year's 52.7 percent, while adjusted gross margin also dropped 270 basis points to 50.0 percent from 52.7 percent a year ago.
The results for the quarter includes an income tax benefit of $134.28 million, compared to only $6.41 million last year.
"We closed 2011 with very solid operating results in both Semiconductor Test and Systems Test and we added an exciting growth engine late in the year with the acquisition of LitePoint," Bradley added.
For fiscal 2011, the company reported net income of $363.75 million or $1.60 per share, lower than $379.73 million or $1.73 per share in the prior year.
Income from continuing operations for the year dropped to $337.83 million or $1.49 per share from $374.60 million or $1.71 per share in the year ago.
Excluding items, adjusted income from continuing operations for the year dropped to $276.4 million or $1.39 per share from $413.6 million or $2.16 per share last year. Analysts expected the company to report earnings of $1.33 per share for fiscal 2011.
Net revenues for the full year declined to $1.43 billion from $1.57 billion in the previous year. Street was looking for full-year 2011 revenues of $1.42 billion.
Looking ahead to the first quarter, the company expects adjusted earnings from continuing operations in a range of $0.22 to $0.33 per share on projected quarterly revenues between $360 million and $400 million.
Street is currently looking for earnings of $0.15 per share for the fourth quarter, on revenues of $295.10 million.
TER closed Wednesday's regular trading session at $16.1389, down $0.17 or 1.04% on a volume of 7.34 million shares. However, the stock climbed $1.30 or 8.06% to $10.68 in after-hours trading.
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