March 9, 2001–Boston, Massachusetts–Teradyne Inc. is lowering its guidance for sales and earnings for the first quarter of 2001 and has put several expense control measures into effect.
“The current economic environment has dramatically reduced demand for our customers’ products. They therefore need fewer products and services from us. This is resulting in new order delays, as well as in rescheduling and cancellation of some of our backlog,” says George Chamillard, Teradyne’s chairman and chief executive officer. “Our sales and earnings for the March quarter will be lower than previously expected. Our previous guidance was for sales to be down about 20% from the $789 million of the fourth quarter (pre-SAB 101), and we anticipated about $0.30/share in earnings. We also said that there would be an additional $0.25/share in earnings from sales recorded in the first quarter due to the effect of SAB 101, for a total of $0.55/share. Our current view is for sales to be down about 35% from the fourth quarter level (pre-SAB 101), with a corresponding reduction in EPS.”
Terdayne expects that the additional $0.25/share from sales recorded in the first quarter due to the effect of SAB 101 will still be realized. “Our visibility is very limited at this point and we don’t know how long the current downturn might last. We are also implementing a series of cost-cutting measures to bring our expenses more in line with the conditions we find in the marketplace,” says Chamillard.
Expense control measures implemented by Teradyne include a cutback of its temporary workforce by more than 1400 people since the peak level; a company-wide hiring freeze; production furloughs in some areas; a delay in several capital spending projects; and the imposition of tight expense controls.