Teradyne Earnings Were Great. The Stock Is Plummeting on the Guidance.

Teradyne Earnings Were Great. The Stock Is Plummeting on the Guidance.

Teradyne Earnings Were Great. The Stock Is Plummeting on the Guidance.

Teradyne (ticker: TER) reported $1.37 in per-share earnings from $885 million in sales. Wall Street was looking for profits of $1.29 a share from $868 million in sales.

Teradyne guided for 88 cents in per-share earnings from about $735 million in sales for the first quarter of 2022. Wall Street was looking for earnings of $1.30 a share and $878 million in sales. It’s a wide gap. What’s more, the company said sales in the first half of 2022 will fall 15% to 20% “due to push out of 3 [nanometer] technology ramp.”

The 3 nanometer, essentially, refers to the size of the node on a semiconductor. Smaller means more nodes and faster chips.

Teradyne Earnings Were Great. The Stock Is Plummeting on the Guidance.

Management focused on the long term in the company’s news release.

“We enter 2022 with strong long-term test and automation demand trends in place and we’ve increased the mid-point of the revenue and non-GAAP earnings per share estimates in our 2024 earnings model to $4.9 billion and $8 respectively,” said CEO Mark Jagiela. Teradyne generated about $6 in per-share earnings from $3.7 billion in sales for all of 2021.

“However, in 2022, we expect a slower technology transition in one of our major end markets to result in lower System-on-a Chip test demand.” That’s the 3 nanometer problem.

Stock in competitor Advantest (6857.Japan) was off 7% in overseas trading as investors digested what Teradyne’s warning means for others.

Coming into Thursday trading, Teradyne stock had gained about 4% over the past 12 months.

Write to Al Root at allen.root@dowjones.com