FREMONT, Calif. -- How bad it is in the chip tester business? Look no further than Credence Systems Corp., which today reported a 91% drop in sales to $18.8 million its fiscal third quarter, ended July 31, compared to $204.0 million in the period last year.
Sequentially, Credence's net sales were down 57% from $43.3 million in the prior fiscal quarter. The company's net loss for the just-ended fiscal quarter was $22.4 million vs. a net income of $41.0 million in the period last year.
"The semiconductor test business is clearly in the midst of an unprecedented downturn, the severity of which is even greater than that experienced in 1985," said Graham Siddall, president and chief executive officer of Fremont-based Credence. "The low test equipment utilization rates being experienced by our customers have continued to result in a virtual cessation of orders or shipments of new production test systems.
"With utilization rates as low as 30% at some of our major customers' facilities, we do not expect a significant upturn in new orders until excess capacity has been absorbed," he said. "Our belief is that this will not occur before the end of the calendar year."
As can be expected, Credence continues to cut its workforce and costs. A new round of layoffs this month will bring the total reduction in the last six months to about 26% of the company's workforce, said John Detwiler, senior vice president and chief financial officer at Credence.
"We have instituted further pay cuts, and we have moved a significant number of our employees onto a four day work week," Detwiler said. "These steps have brought our recurring cash operating expenses down about $4 million this quarter, with a decrease of another $1-to-$2 million expected next quarter."
Credence's net loss for the fiscal third quarter included pre-tax expenses of $1.7 million for charges related to the company's acquisition of Integrated Measurement Systems Inc. (see Aug. 2 story). The net loss also included $1 million for severance and other charges related to the company's continuing job cuts.
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