Why Shares of Photronics Tumbled Today

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What happened

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Shares of photomask manufacturer Photronics (NASDAQ: PLAB) slumped on Tuesday following the company's third-quarter results and news that the CFO was retiring. Photronics missed analyst estimates for both revenue and earnings, reporting a steeper-than-expected revenue decline; this comes three months after a weak second-quarter report. The stock was down about 20% at 3:30 p.m. EDT.

So what

Photronics reported third-quarter revenue of $111.6 million, down 9% year over year and $3.5 million below the average analyst estimate. Sales of integrated-circuit (IC) photomasks slumped 7% to $85.1 million, while sales of flat-panel-display (FPD) photomasks dropped 16% to $26.5 million.

Earnings per share came in at $0.06, down from $0.12 during the prior-year period and $0.03 lower than analyst expectations. Photronics CEO Peter Kirlin commented on the quarter:

IC sales were generally in line with our expectations, as high-end memory grew and high-end logic remained flat. FPD sales were also higher, although slightly below our expectations due to unfavorable product mix. Operating income was modestly lower as an increase in gross profit was offset mostly by higher R&D [research and development] as qualification activity remained robust.

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Sean Smith, CFO of Photronics since 2002, will step down from that position on Sept. 4. The new CFO will be John Jordan, currently the CFO of data-visualization company AstroNova.

Now what

Photronics sees the fourth quarter being similar to the third quarter, with growth in high-end memory offset by weakness in high-end logic. Revenue is expected to come in between $108 million and $116 million, up from $107 million during the prior-year period and roughly flat at the midpoint sequentially. EPS is expected to be between $0.03 and $0.09, compared to $0.07 in the fourth quarter of last year.

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Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.