(TER) - Get Report

swung to a third-quarter profit, reversing a big year-ago deficit, but the results fell short of estimates and the company said customer activity was waning.

The stock responded by falling 48 cents, or 3.4%, to $13.73.

The Boston-based semiconductor equipment maker earned $41.1 million, or 21 cents a share, in the three months ended Sept. 31, compared with a loss of $53.5 million, or 28 cents a share, last year. Revenue rose 39% from a year ago to $457.8 million. Analysts had been forecasting earnings of 23 cents a share in the 2004 quarter.

The company said net orders totaled $284.1 million in the quarter, reflecting customer trepidation amid an inventory correction in the semiconductor industry.

"Our customers sharply lowered their capital spending in the third quarter, resulting in a significant reduction in our orders compared with the second quarter," Teradyne said. "We're responding to this by lowering our shipment plan and reducing our costs in the fourth quarter."

In the fourth quarter, the company expects earnings of breakeven to 4 cents a share on sales of $360 million and $380 million. Analysts had been expecting earnings of 16 cents a share on sales of $420 million.