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The Nihon Keizai Shimbun warned correctly yesterday that Advantest (NYSE:ATE) was likely to miss its own earnings estimates. This, despite net income, operating profit and sales all increasing double digits in H1, compared to last year. More bad news for investors is Advantest lowered its full-year guidance.

First-half 2006 earnings:

Pre-earnings operating profit estimate: 34 billion yen ($285m)
Nihon Keizai operating profit estimate: 32 billion yen ($268.5m)
Advantest actual operating profit: 32.2 billion yen ($270m), +42% y-o-y

Net income: 22.2 billion yen ($186m), Y118.79/share basic, Y118.03/share diluted, +52%

Sales: 120.5 billion yen ($1.01b), +13%

Advantest lowered full-year (ending March 2007) guidance for consolidated net income by 1 billion yen (-2.3%) from its earlier forecast in April, to 43 billion yen. Operating profit is now expected to be 65 billion yen (-7%), versus a prior estimate of 70 billion yen. And sales are seen at 255 billion yen (-3.8%), down 10 billion yen from April. On a parent-only basis, forecasted net income was reduced 8.3% to 33 billion yen, ordinary income -12.5% to 49 billion yen, and sales -6.5% to 215 billion yen.

Bloomberg.com quotes Advantest president Toshio Maruyama, who said:

"Capital expenditures by U.S. chipmakers such as Intel (NASDAQ:INTC) fell more than expected."

In a statement, Advantest explained its earnings miss and downward revision as follows:

At the interim fiscal period of FY 2006, sales of test systems for non-memory semiconductors and front-end test systems for DRAM semiconductors did not achieve our previous forecasts, and accordingly, sales and income for this interim fiscal period fell below our previous forecasts. Our forecast for this entire fiscal year also is expected to fall below our previous forecasts because such decreases from this interim fiscal period cannot be recovered within FY 2006.

Advantest's ordinary shares (Tokyo: 6857) fell 3.1% to close at 5,940 yen ($50.55 at Y117.5/US$1), ahead of its after-hours earnings announcement. In intra-day morning trading its ADRs are down 2.8%, trading at $50.35.

Advantest IR links: Earnings presentation, Financial results and Revision of earnings forecast

Advantest Corp (ATE) 1-year chart:

Disclosure: The author does not own shares of any companies mentioned in this article.

Source: Advantest's H1 Profit Up 52%, But Lowers Full Year Guidance