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Dark Days at Aetrium

Shares fall 38% as orders slow.



sank 38% after the chip supplier warned of a fourth-quarter order slowdown.

The St. Paul, Minn., company made $1.3 million, or 12 cents a share, for the third quarter ended Sept. 30, reversing the year-ago loss of $1 million, or a dime a share.

Revenue rose 149% from a year ago and 6% sequentially to $9.2 million.

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"Our gross margins of 48% fell short of our long-range average goal of 50%, due primarily to the sale of some unusually low margin products that we expect will be a one-time event," the company said.

"The third quarter exhibited a general weakness in orders and a noticeable slowness in the ordering process that could be considered typical of a seasonal slowdown," Aetrium added.

"It seems to be especially true this year for equipment suppliers to the back end of the semiconductor industry like Aetrium, who experienced very rapid growth during the first two quarters.

"Orders from our two largest customers slowed significantly during the quarter as they integrated equipment that they had acquired and installed during this and the previous quarter," the company explained. "As a result, our orders fell considerably short of our revenue for the quarter, leading to a negative book to bill for the first time in four quarters. The slow bookings activity has continued into the fourth quarter. Accordingly, we are planning for a decline in sequential revenues for the current quarter that will likely be significant.

"However, most forecasters of the semiconductor industry expect growth conditions to continue well into next year, and we anticipate that our larger customers will likely return to more robust ordering activity by the first quarter of 2007," the company said.

Shares fell $2.06 to $3.35.