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Teradyne, Inc. Q1 2010 Earnings Call Transcript

Teradyne, Inc. Q1 2010 Earnings Call Transcript

Teradyne, Inc. (TER)

Q1 2010 Earnings Call

April 22, 2010; 10:00am ET


Mike Bradley - Chief Executive Officer

Greg Beecher - Chief Financial Officer

Andy Blanchard - Vice President of Investor Relations


Jim Covello - Goldman Sachs

Raj Seth - Cowen & Company

Krish Sankar - Bank of America–Merrill Lynch

Satya Kumar - Credit Suisse

Gary Hsueh - Oppenheimer & Co.

Daniel Galzuke - Unidentified Company

Olga Vincent - Barclays Capital

Patrick Ho - Stifel Nicolaus

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Good morning, my name is Rebecca and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1, 2010 earnings conference call. All lines placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the call over to our host Andy Blanchard, Vice President of Investor Relations. Mr. Blanchard, now you may begin.

Andrew Blanchard

Good morning everyone and welcome to our discussion of Teradyne’s most recent financial results. I am joined this morning by our Chief Executive Officer, Mike Bradley; and our Chief Financial Officer, Greg Beecher.

Following opening remarks, we will provide details of our performance for the first quarter of 2010 as well as our outlook for the second quarter. First, I’d like to address several administrative issues. The press release containing our most recent financial results was sent out via the business wire last evening. Copies are available on our website or by calling Teradyne’s corporate relations office at 978-370-2221.

This call is being simultaneously webcast at

. Note that during this call, we are providing slides on the website that may be helpful to you in following the discussion. To view them simply access the investor page of the site and click on live webcast. In addition, replays of this call will be available via the investor’s page of about 24 hours after the call ends. The replays will be available along with the slides through May the 14th.

The matters that we discuss today will include forward-looking statements that involve risk factors that could cause Teradyne’s results to differ materially from management’s current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release as well as our most recent SEC filings for a complete description. Additionally, those forward-looking statements are made as of today and we take no obligation to update them as a result of developments occurring after this call.

During today’s call, we will make reference to non-GAAP financial measures. We have posted additional information concerning these non-GAAP financial measures including reconciliation to the most directly comparable GAAP financial measure where available on our website. To view them, go to the investor page and click on GAAP to non-GAAP reconciliation link.

Also, you may want to note that between now and our next conference call, Teradyne will be participating in the Credit Suisse Electronic Supply Chain Conference on May 12, in Boston, Cowen’s 38th Annual Technology Media & Telecom Conference, on June 2 and 3 in New York and UBS Global Technology and Services Conference on June 10 in New York, And Eric May Luncheon’s in New York and Boston on June 3 and 23 respectively.

Now lets get on with the rest of the agenda. First our CEO, Mike Bradley will review the state of the company and the industry in the first quarter and will review our outlook for the second quarter. Then our CFO, Greg Beecher will review details on our quarterly financial performance along with our guidance for the second quarter. We will then answer your questions. For scheduling purposes you should note that we intend to end this call after one hour. Mike.

Mike Bradley

Thanks Andy. Good morning everyone, thank you for joining us on the call this morning. We are off to a strong start to 2010 with a very solid first quarter and increased revenue on profit guidance for the second quarter. It’s been an exceptional start for the year in three respects.

First our SOC test product line up is seeing increase in demand across a wide array of customers in technology segments. Second, the business model we’ve shaped in the last two years is delivering markedly improved performance, and third this performance is being achieved without a strong rebound in the memory test markets so far, which means that we should have another contributor once that market gets moving.

I’ll asked Greg to focus on the financial model comparisons in his comments, but I would like to expand on what’s behind our bookings and sales numbers for the first half of the year.

As you saw on our press release, we logged $534 million in bookings in the first quarter, up over $230 million from the Q4 total of $303 million. Semi Test led the way up about $200 million sequentially and totaling $460 million in the quarter, the highest Semi Test total in ten years. System test group orders which include our defense automotive commercial board test and hard disk drive test units saw their own healthy order surge up above 85% from the fourth quarter, driven mostly by disk drive and commercial board test.

Since many of these businesses and system tests have longer lead time profiles, you’ll see much of that revenue flow through starting in the third quarter, but back to semiconductor tests. There are a number of things contributing to our strong showing; first of all the utilization remains very high in our leading edge products. Device unit volumes are increasing and the appetite for testers that are for high performance and high productivity is on the rise.

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