(Adds analyst’s comments, details, updates share movement)
By Purwa Naveen Raman
BANGALORE, Feb 9 (Reuters) - Semiconductor testing company Verigy Ltd VRGY.O cut its first-quarter revenue outlook, hurt by non-payment for several systems previously shipped to a large memory customer, sending its shares down 15 percent.
“That memory customer, based on our checks, is Spansion Inc SPSN.O,” Oppenheimer & Co analyst Gary Hsueh told Reuters.
Chipmaker Spansion, weighed down by an enormous debt, is exploring a possible sale of itself as it struggles for survival amid worsening market conditions.
Hsueh said checks suggest that Verigy’s total exposure to Spansion is of 20 to 30 systems, each one worth about $1 million to $2 million.
Semiconductor makers around the world are grappling with a near two-year sector downturn, caused by chronic oversupply and weak demand exacerbated by the financial turmoil.
For the first quarter, the company now expects revenue of $66 million to $68 million, down from its prior estimate of $95 million to $110 million.
“The magnitude of the preannouncement was a surprise. However, the fact that they negatively preannounced was not,” Hsueh said.
Verigy also said it will report losses that are greater than the estimates included in its previously provided outlook of a net loss of 36 cents to 46 cents a share.
The company said it expects its business to be hurt through at least the first half of calendar year 2009.
Verigy is seeing a much steeper degradation in its fundamental business compared to its closest peer Teradyne Inc TER.N, the analyst said.
In addition to cost-cutting and restructuring measures announced in the fourth quarter, Verigy is implementing actions including shortened work time, further job cuts and temporary salary reductions.
These actions are expected to yield annual cost savings of about $90 million to $100 million, it said.
The company expects its workforce reduction plans to be substantially completed by the end of calendar 2009.
Verigy is also in the process of evaluating the carrying value of its goodwill, intangible and other assets, which may lead to an impairment charge in the first quarter, it said in a statement. Shares of the company, which competes with Japan’s Advantest Corp (6857.T), were down at $8.10 in trading after the bell. They closed at $9.56 Monday on Nasdaq. (Editing by Amitha Rajan)