Preliminary net loss, before the expected write-down of goodwill and intangible assets, for the quarter was $37.5 million, or minus $0.37 per share, versus a net loss of $14.2 million, or minus $0.14 per share, in the immediately preceding quarter. Net loss from a year-ago third quarter was $41.7 million, or minus $0.43 net loss per share.

The troubled supplier of automatic test equipment (ATE) blamed the results on a shortfall of sales in the IC verification and system-on-a-chip (SOC) test businesses. It also recently exited the flash-memory test business.

The company also dropped hints that it would implement more cost-cutting measures, including additional layoffs and a move to outsource its manufacturing to third-party vendors in the 2007 time frame.

Net orders for the third quarter of fiscal 2006 were approximately $107.5 million, corresponding to a book to bill ratio of 0.98.

The preliminary net loss before the expected write-down of goodwill and intangible assets this quarter included charges of $32.4 million consisting of an inventory write down of approximately $24.2 million, restructuring charges of $1.8 million, an impairment of an equity investment of $0.9 million, stock compensation expense under FAS 123 of $1.6 million and intangibles amortization of $4.3 million.

"A softening of the PC market and lower utilization rates were the primary factors contributing to our shortfall this fiscal quarter," said Dave Ranhoff, president and chief executive of Credence Systems (Milpitas, Calif.), in a statement.

"While we are clearly disappointed with our financial results, we remain all the more determined to rapidly return the company to profitable growth," he said. "Early in the fourth quarter we announced plans to reduce our workforce by 14 percent and significantly reduce our expenses. We have taken decisive steps to focus the company on higher growth opportunities and modify our business model to strengthen the company's financial position for the long term."

Third quarter results should be finalized on or before Sept. 11, when the company files its Form 10-Q. The final results should include the impact of the goodwill and long-lived assets.

As previously reported, Credence expects to take a material non-cash charge to reduce the carrying amount of goodwill and intangible assets. The company expects the charge to range from approximately $300-to-$400 million.

Net sales in the fourth quarter of fiscal 2006 are expected to be consistent with third quarter levels at approximately $105-to-$110 million, with a loss per share on a GAAP basis in the range of $0.13-to-$0.15.

This guidance reflects an estimated charge in the range of approximately $8.0-to-$10.0 million associated with headcount reductions, but does not include any potential additional impairment charges resulting from a further decline in market value from the third quarter.