What were the primary drivers for the revenue decline in the third quarter of 2007?

The revenue decline was primarily driven by a decrease in demand across various end markets for Semiconductor Test products and the conclusion of a large program rollout in the prior year for the Vehicle Measurement Module product line within the Systems Test Group. This resulted in a 13.9% decrease in Semiconductor Test revenue and a 22.1% decrease in Systems Test Group revenue compared to the prior year's third quarter.

How did the sale of the Broadband Test Systems division affect the financial results?

The sale of the Broadband Test Systems division on August 1, 2007, resulted in the classification of its financial results as discontinued operations. For the third quarter of 2007, this division contributed $5.8 million in income from discontinued operations, including a gain of $6.3 million from the sale itself. This segment's results were excluded from the ongoing 'Results of Operations' discussion.

What is the company's current liquidity position, and what actions are being taken regarding capital allocation?

Teradyne maintained a strong liquidity position with $429.1 million in cash and cash equivalents and $131.4 million in marketable securities as of September 30, 2007, totaling $560.5 million in liquid assets. During the first nine months of 2007, the company repurchased $203.6 million of its common stock and repaid convertible notes. The company stated that its cash, cash equivalents, and marketable securities balance is expected to be sufficient to meet working capital and expenditure needs for the foreseeable future.

Are there any significant legal proceedings that could materially impact the company?

Teradyne is involved in certain legal proceedings, including a securities fraud and breach of contract claim related to past acquisitions and a designation as a Potentially Responsible Party (PRP) for an environmental clean-up site. While the company believes it has meritorious defenses and intends to contest these claims vigorously, it acknowledges that the outcomes are uncertain and could potentially be material to its consolidated results of operations in any one period, though not expected to materially affect its financial position or liquidity.

TER 10-Q Filed Nov 9, 2007

Summary

Teradyne, Inc. reported net revenues of $299.5 million for the third quarter of 2007, a decrease of 15.6% compared to $354.7 million in the same quarter of the prior year. This decline was primarily driven by a 13.9% decrease in Semiconductor Test revenues and a 22.1% decrease in Systems Test Group revenues, reflecting softer demand and the winding down of a significant program in 2006. For the nine months ended September 30, 2007, net revenues were $841.9 million, down 23.3% from $1,097.6 million in the comparable period of 2006. Net income for the third quarter of 2007 was $41.0 million, or $0.22 per diluted share, compared to $60.6 million, or $0.31 per diluted share, in the third quarter of 2006. The company also completed the sale of its Broadband Test Systems division on August 1, 2007, which contributed to a net income of $5.8 million from discontinued operations for the quarter. Teradyne ended the quarter with a strong cash position of $429.1 million, though this represents a decrease from the prior year, partly due to significant stock repurchases and the repayment of convertible notes.

Key Highlights

1Net revenues for Q3 2007 decreased by 15.6% year-over-year to $299.5 million, impacted by declines in both Semiconductor Test and Systems Test Group segments.
2Net income for Q3 2007 was $41.0 million ($0.22/share), down from $60.6 million ($0.31/share) in Q3 2006.
3The company completed the sale of its Broadband Test Systems division on August 1, 2007, classifying its results as discontinued operations.
4Bookings increased by 14.8% in Q3 2007 to $273.3 million, driven by a 19.1% increase in Semiconductor Test bookings.
5Cash and cash equivalents and marketable securities stood at $747.7 million at the end of the nine-month period, a decrease from the prior year, influenced by stock repurchases and debt repayment.
6Teradyne repurchased approximately $203.6 million of its common stock during the first nine months of 2007.
7A significant gain of $6.3 million from the sale of discontinued operations (Broadband Test Systems) was recorded in the nine-month period.

TERADYNE, INC Quarterly Report for Q3 Ended Sep 30, 2007

Summary

Key Highlights

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