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Updated from May 19

Credence Systems


posted second-quarter results Wednesday that beat analyst estimates as the company swung into the black vs. a year ago. Credence Systems, which sells semiconductor-testing equipment, also said its stronger-than-expected performance will continue in the third quarter.

The news prompted Banc of America Securities to upgrade its rating on Credence to neutral from sell Thursday; shares were recently up 52 cents, or 4.3%, to $12.63.

BofA analyst Mark FitzGerald said his upgrade was driven by Credence's acquisition of

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, which he said fills a major hole in the company's product line. Shareholder approval is expected May 27.

However, FitzGerald said his confidence in Credence management remains low, product development remains a weak suit and expenses appear out of whack. He noted that the company had a gross margin of 52% in the April quarter but an operating margin of only 4.3%. (His firm has done investment banking with Credence in the past 12 months.)

Milpitas, Calif.-based Credence Systems swung to a profit of $4.3 million, or 6 cents a share, in the fiscal second quarter, from a loss of $29.1 million, or 46 cents a share, in the same period last year under generally accepted accounting principles.

Net sales rose about 124% from a year ago and 40% sequentially to $95.1 million.

Wall Street analysts expected Credence Systems to earn 2 cents a share on $87.5 million in revenue in the second quarter, according to Thomson First Call.

Credence expects third-quarter revenue to range from $116 million to $120 million and earnings to range from 15 cents to 17 cents a share. That's considerably better than the consensus analyst estimate calling for revenue of $100.9 million and earnings of 9 cents a share.