Verigy Reports Disappointing 3Q Guidance

Goldman Sachs has published a research report on Verigy Ltd. VRGY after the company reported disappointed guidance in its 3Q results. In the report, Goldman Sachs writes "We are disappointed that management guided for a loss in 4QCY at the mid-point despite its restructuring actions during the downturn and a still high proportion of better margin SoC sales. We believe simultaneous attempts to penetrate the probe card, high-speed memory, and low-cost logic markets has resulted in too much cost relative to the current revenue opportunity. Management believes LTX will give it the proper mix and scale, and be 15%-20% accretive to EPS in the first 12 months. Our scenario analysis suggests this is achievable." Goldman Sachs maintains its Neutral rating and has lowered the price target to $9.50 from $14. Verigy Ltd. closed yesterday at $8.45.