Credence Systems Corp, the Fremont, California-based maker of semiconductor testing equipment, saw a huge revenue drop in its third quarter, undermining the company after a period of impressive growth. Revenues fell by 27% to $37m for the three months ending July 31 which runs contrary to the company’s doubling of revenues in the first half of 1998. The loss of $33m in the quarter, up from a loss of just $1m for the prior year, was a direct result of Credence’s inability to scale down costs in the face of such sharply declining revenues. Throughout the quarter the business outlook continued to deteriorate and did not allow sufficient response time to avoid an operating loss despite the significant actions taken, said CEO Wilmer Bottoms. Credence makes semiconductor test equipment predominantly for multimedia graphics chips, microprocessors and memory. Asked about his outlook for the semiconductor industry as a whole, Bottoms said, I certainly think we’re at the bottom right now, but he added that visibility was extremely limited for his company. The company’s share price has been depressed along with most other players in this sector, and Credence has taken advantage of this relative cheapness by announcing a $20m stock repurchase program. Bottoms said the company had sufficient cash resources to wait for the industry upswing and so it was taking advantage by making a very sound investment on behalf of our shareholders.
