Investors in Orbotech Ltd. (Nasdaq: ORBK) had no very high hopes of the company's financials that were released today. After all, in early October Orbotech cut its revenue guidance, and last week it announced that it was laying off 6% of its workforce in order to adapt its expenditure to the reduced revenue level.
Today it turned out that the company's bottom line was also hit badly because of one-time write downs amounting to $46 million, which caused a loss for the quarter on a GAAP basis of $45.7 million, or $1.05 per share, compared with $0.8 million, or $0.02 per share in the second quarter of 2012, and a net profit of $14.7 million, or $0.34 per share in the third quarter of 2011. Excluding non-cash items, the loss was $12.3 million, compared with a profit of $18.6 million in the corresponding quarter. To sweeten the bitter pill, Orbotech announced a $30 million share buyback program.
Orbotech makes inspection systems for production lines of electronic products and components, chiefly printed circuits (PCB) and flat panel displays (FPD). In FPDs, the weakness seen in previous quarters continued. Revenue in this segment totaled $15.3 million, compared with $12.3 million in the previous quarter and $49.6 million in the corresponding quarter last year.
While the weakness in FPDs has been felt for a while, the slowdown in PCBs led to the second cut in the company's guidance this year. Revenue in this segment totaled $42 million in the third quarter, compared with $48.6 million in the previous quarter and $56.6 million in the corresponding quarter of last year.
Orbotech CFO Doron Abramovitch told "Globes" today, "The slowdown in OCB stems from the situation in the global market. The manufacturers aren't buying new equipment, and are buying fewer of our more advanced machines, which were meant to have been our growth engine this year."
The company's total revenue, which included customer service and other activities, fell 31.% in comparison with the corresponding quarter to $98.9 million.
The write downs in the quarter were of intangible assets allocated to the FPD business ($30 million), a write-down of inventories and a provision for open commitments relating primarily to components for FPD products ($14.3 million), and costs in connection with ongoing Korean litigation ($1.7 million).
The company completed the quarter with cash, cash equivalents, short-term bank deposits and marketable securities of $276.2 million and debt of $72 million, compared with cash, cash equivalents, short-term bank deposits and marketable securities of $279.1 million and debt of $80 million at the end of the second quarter of 2012. The company generated cash of $7.9 million from continuing operations in the third quarter of 2012.
According to the guidance that the company gave at the beginning of October, its fourth quarter revenue will be similar to that of the third, at about $100 million.
Published by Globes [online], Israel business news - www.globes-online.com - on November 5, 2012
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