Veeco Instruments' quarterly profits plunge

Veeco Instruments Inc., which sells tools to manufacturers of low-energy lighting chips used in televisions, cellphones and streetlamps, said Monday that fourth-quarter profits plunged.

The Plainview-based company also forecast a weak start to 2012, with its customers putting off investments in new equipment.

Profit in the October to December period was $23.6 million on sales of $191.7 million, down 77 percent from $103.4 million for the year-ago quarter, on sales of $299.8 million. Both financial measures fell short of analysts' expectations. Full year sales rose 5 percent to $979.1 million -- short of the $1 billion target the company set last year.

First quarter sales will fall to between $115 million and $140 million as its customers continue to scale back investments, Veeco forecast. Veeco, one of the Island's largest publicly traded firms and an employer of about 300 here, is coping with a structural challenge, analysts and company officials say. In countries like China, manufacturers have far more capacity than is currently needed to meet customer demand for lighting.

In a December note to clients, Maxim Group analyst Aaron Chew estimated that manufacturing capacity for light-emitting diode, or LED, lighting chips used in lamps and backlights for electronics exceeds 2012 demand needs by 70 percent. That means less need for Veeco's tools.

On a call with analysts Monday afternoon, Veeco chief executive John Peeler said "orders could be depressed for multiple quarters." Peeler said future demand for LED lighting, which can be used in homes, in businesses and in streetlamps, is "enormous," and called the current lack of investment a "temporary pause."

Analysts agreed with that assessment, but were nonetheless surprised by Veeco's late-year results and its bleak forecast for the January to March quarter.

Veeco's stock was down more than 4 percent in after-hours trading.