Eagle Test Systems reports slow demand

Eagle Test Systems Inc., a Buffalo Grove maker of semiconductor testing equipment, reported drops in profits for the fourth quarter and 2007 fiscal year but exceeded analysts' estimates for the quarter.

Net income for the quarter ended Sept. 30 declined 68 percent to $3 million, or 13 cents per diluted share, from $9.3 million, or 44 cents per diluted share, in the year-earlier period. Analysts estimated Eagle would earn 10 cents per diluted share, according to Zacks Investment Research Inc.

The company estimated it will earn between 11 and 15 cents per diluted share in the current quarter ending Dec. 31, which is comparable with the estimate of 15 cents compiled by Zacks. Eagle announced its earnings earlier this week.

Eagle's fourth-quarter revenue declined 44 percent to $20.8 million from $36.9 million in the year-earlier period. Noting it's dependent on the semiconductor sector, the company said weak market conditions have trickled down to soften Eagle's revenue. The Philadelphia Semiconductor Index, a price-weighted index of 18 semiconductor stocks, has declined 13 percent year-to-date. In that time, Eagle's shares have fallen 21 percent.

Eagle projected current quarter revenue to be between $25 million and $27 million, which is in line with analysts' estimates reported by Yahoo Finance.

More than 54 percent of Eagle's quarterly revenue came from three of its biggest customers, Texas Instruments Inc., Intersil Corp. and STMicroelectronics N.V., making Eagle heavily reliant on this small market. Eagle is required to report customers that provide 10 percent or more of the company's revenue. Steve Hawrysz, the chief financial officer, said the company is working to broaden its customer base.