LOS ANGELES (AP) -- Shares of automatic chip-testing equipment maker Teradyne Inc. fell Monday after an analyst slashed profit estimates based on weak demand for personal computers, hard disk drives and slower-than expected growth in China.
THE SPARK: Pacific Crest Securities analyst Weston Twigg said in a research note that he now estimated demand for automated test equipment will be $3.1 billion for all of 2012, about even with a year earlier and on the low end of the range expected by the company.
Twigg expects that demand for test equipment for the system-on-a-chip market will be $2.57 billion, at the low end of Teradyne's expectation for an end market around $2.5 billion to $2.8 billion. He expects the market for memory tests to be $500 million, also at the bottom of Teradyne's expected range of $500 million to $700 million.
He expects Teradyne's market shares to be 44 percent and 16 percent respectively.
THE BIG PICTURE: Teradyne is a leading supplier of automated test equipment for chips, wireless products, data storage and complex electronic systems. Last year, Teradyne had sales of $1.4 billion and employs about 3,300 people worldwide.
ANALYSIS: On expectations of lower end-market demand, Twigg cut his profit estimate for the third quarter to 40 cents per share from 48 cents and cut his fourth-quarter estimate to 13 cents from 38 cents. That reduces his view of full-year profit to $1.60 per share, down from $1.93 per share previously.
He now expects $1.67 billion in annual revenue, down from $1.81 billion previously.
He said that because of the estimate downgrade, shares could fall as low as $14, but pick up to $20 next year as the company rebounds on a pick-up in demand.
SHARE ACTION: Shares fell 64 cents, or 3.9 percent, at $15.79 in afternoon trading Monday. Shares are down from a 52-week high of $18.01 reached in late April.