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Etec drops after 3Q shortfall, downgrade

Etec Systems Inc. (Nasdaq: ETEC) slipped 6 15/16 to 29 1/16, or 19 percent, on Thursday after it missed expectations for its third quarter and faced a subsequent downgrade.

Earlier, Credit Suisse First Boston downgraded the company to "hold" from "buy" and Needham & Co. reiterated its "buy" opinion.

The semiconductor-equipment maker missed analysts' estimates in its third quarter Wednesday, earning $1.9 million, or 9 cents a share, on sales of $57 million.

First Call consensus expected it to earn 10 cents a share in the quarter.

Etec controls about two-thirds of the photolithography mask patterns equipment market. The masks are used to print circuit patterns on chip wafers and integrated circuit boards from which computer chips are cut.

Customers include DuPont Photomasks Inc. (Nasdaq: DPMI), and Photronics Inc. (Nasdaq: PLAB) as well as Hewlett-Packard, IBM Corp. (NYSE: IBM) and Intel Corp. (Nasdaq: INTC), the world's largest chipmaker

More than half of Etec's sales last year came from Asia, with 26 percent of revenue from the U.S. and another 15 percent from Europe.

In related news, Photronics, a client, the First Call Corp. consensus estimate of 11 cents a share for its second quarter, reporting a profit of 9 cents a share.