October 10, 2006 – Blaming a weaker-than-expected environment for data storage capex, Veeco Instruments Inc. has reduced its revenue and earnings forecast for the third quarter to be roughly flat with second-quarter results.

The company now expects to report an earnings/share profit of $0.11-$0.14 on revenues of $111-$114 million, down from a previous guidance of $0.23-$0.29 EPS on sales of $125-$130 million. Bookings for 3Q are expected to be at the low end of previous estimates, of $115-$130 million.

Data storage customers that purchased “a significant amount” of new from Veeco in 1H06 are absorbing those purchases more slowly than anticipated, and as a result about $15 million in equipment that was supposed to ship in 3Q has been pushed out to 4Q, though no equipment has been cancelled, the company stated. Fourth-quarter revenues are now seen rising to more than $120 million, with orders also increasing sequentially.

“”While data storage remains a year-over-year Veeco revenue growth opportunity for 2006, our customers are clearly slowing their capex production ramp for the second half of this year,” said Veeco chairman/CEO Edward Braun, in a statement, adding that he expects a “multiquarter” adjustment in capex purchases as customers reassess production ramps and technology transition plans.

However, he pointed out that the segment still promises significant growth opportunities, as “industry requirements for increased areal density and consumer electronic expansion will continue to drive future investment in perpendicular head technology, transition to smaller femto slider formats, and conversion to larger wafer size.”