Although Nanometrics believes that the expectations reflected in the forward-looking statements are reasonable, actual results could differ materially from the expectations due to a variety of factors including a change in current levels of industry spending, shifts in the timing of customer orders and product shipments, changes in product mix, increased operating expenses and the additional risk factors and cautionary statements set forth in the company’s Form 10-K for the fiscal year 2010 as well as other periodic reports filed with the SEC from time to time. Nanometrics disclaims any obligation to update information contained in any forward-looking statement.
I will now turn the call over to Ronald Kisling. Ron?
Thank you, Claire and good afternoon. In the third quarter we delivered strong financial results in spite of increased industry volatility and concerns regarding consumer demand and the worldwide economy. Revenues were $58.3 million near the midpoint of our guidance, down 9% from the prior quarter and up 8% from the third quarter of last year. Total product revenues of $49.8 million were down 8% from the second quarter and up 12% from the third quarter of 2010. Service and upgrade revenues of $8.4 million declined 17% sequentially and 12% year-over-year primarily due to a decrease in upgrade revenues. In total, service revenues comprised 14% of sales down from 16% in Q2. Sales of our automated metrology systems decreased 12% over Q2 and comprised 58% of total revenues. Our flagship OCD tool revenue saw the largest decrease driven primarily by capacity pushouts in both memory and logic. This was partially offset by increased sales of our UniFire and overlay automated systems.Our integrated metrology sales grew by 10% over Q2 our third straight quarter of growth mostly driven by flash technology spending and comprised 13% of total revenues. Our materials characterization business declined by 12% compared to the second quarter comprising 15% of total revenues primarily due to lower sales into the LED segment.