Q1 2007 VERIGY LTD Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good day ladies and gentlemen, and welcome to the First Quarter 2007 Verigy Earnings Conference Call. My name is Lisa, and I will be your coordinator for today.

[OPERATOR INSTRUCTIONS]

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Ms. Judy Davies, Vice President of Investor Relations. Please proceed.

JUDY DAVIES, VP, IR, VERIGY LTD.: Thank you, Lisa. Good afternoon, everyone, and welcome to the financial teleconference for Verigy's first quarter of fiscal year 2007, which ended January 31st. With me today are Keith Barnes, our President and CEO, and Bob Nikl, our CFO. Our press release was sent out today over the Business Wire, and it is posted on the Company's website. For any reason, should you not be able to locate this press release or require assistance in finding the information, please contact me directly at 408-864-7549.

I would like to remind everyone that today's comments, including our question-and-answer session, may include forward-looking statements. Forward-looking statements on this teleconference are generally identified by words such as expect, anticipate, intend, plan, believe, estimate, and variations of such forward and similar expressions.

In addition, any statement that refers to expectations, projections or other characterizations of future events and circumstances are forward-looking statements such as those regarding Verigy's revenues and earnings guidance for our second quarter of fiscal 2007 and our operating plan and underlying assumptions. These forward-looking statements are based on current information and estimates, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

Factors that may cause results to differ materially from those in the forward-looking statements are discussed in our annual report on Form 10-K for the year ended October 31, 2006, and other documents on file with the Security and Exchange Commission. The forward-looking statements, including guidance provided during today's call, are only valid as of this date, and Verigy undertakes no obligation to update the forward-looking statements or our financial guidance. The only persons authorized to give financial guidance for Verigy are myself, Keith Barnes, our President and CEO, and Bob Nikl, our CFO.

In addition, during this call, we may discuss non-GAAP financial measures including non-GAAP net income and earnings per share. To the extent we discuss any non-GAAP financial measures, you will find the required reconciliation to the most directly comparable GAAP financial measure on our website.

The agenda for today's teleconference is as follows. Keith will provide highlights of our first quarter financial results, review current trends in our market, present an update on the Company's operations and products, and provide guidance for our second quarter. Bob will follow with details on our first quarter financial results and provide additional guidance for our second quarter. At the conclusion of our comments, we will open up the call for questions, and we intend to limit today's call to one hour.

Thank you all, and now I would like to turn the call to our President and CEO, Keith Barnes.

KEITH BARNES, CEO AND PRESIDENT, VERIGY LTD.: Thank you, Judy. Good afternoon everyone and thank you for joining our earnings call for the first quarter of fiscal year 2007. Total revenue was $165 million, thanks to the continued strength of our V5000 platform, ongoing acceptance of our 93000 Pin Scale products, and our solid execution. Orders for the quarter were $133 million compared to $164 million in the fourth quarter of fiscal 2006, representing a sequential decline of 19%. However, stay tuned for the guidance section of this call because we are expecting an upturn in our business in Q2.

As you may recall, Verigy's business model is based on three principles. Number one, technology innovation; number two, customer satisfaction; and number three, a flexible yet focused operating model designed to deliver predictable results through the business cycles. During the quarter, we continued to execute on these three principles.

We met our delivery commitments to our customers, penetrated new customer accounts in growth product areas, and delivered solid financial performance for the quarter. We maintained $300 million in cash and ended the quarter debt free. We are pleased that our business has performed exceptionally well, and consistent with our model, during a cyclically soft period in the semiconductor test industry.

Now, I would like to review the progress we made with our products. During the quarter, we achieved new customer wins with our expanded memory offering, new high volume manufacturing wins in high speed memory, and new design validation and high speed manufacturing wins in SOC. We also believe that our scalable platform strategy, our traditional strength in the OSATs and our penetration into important IDMs give us a strong foundation for future growth.

Sales of our V5000 memory products represented 48% of our …