Shares of Cabot Microelectronics Corp. dropped 3.6 percent Thursday after the company reported sharply lower earnings and sales attributed to the declining economy, missing the analysts' consensus estimate.

The Aurora-based company, which makes materials for chip manufacturing, earned $116,000, or 1 cent per diluted share, in the first quarter ended Dec. 31, down 97 percent from $12.2 million or 51 cents a share in the year-earlier period, and 36 cents a share in the previous quarter. Analysts estimated a profit of 5 cents per diluted share.

Sales decreased a dismal 32.5 percent to $63 million, down from $93.4 million in the same quarter last year, and a 30.1 percent decrease from $90.2 million in the previous quarter.

On Jan. 7 the company issued a statement projecting revenue for the first quarter of $62 million to $63 million. Analysts polled by Thomson Reuters most recently were forecasting $79 million.

"We experienced an extraordinary and precipitous drop in demand for our products this quarter, which we believe reflects current market conditions and is generally consistent with the decrease in overall industry demand,” Cabot CEO William Noglows said in a press release.

The company reported that the decline in revenue adversely affected all of its business areas and geographies.

“Customers have stomped the brakes on production,” Bill Johnson, the chief financial officer, said in a phone interview. “The question is, how long before they take their foot off the brake and put it back on the accelerator?”

Johnson said the company will continue to focus on cost reduction initiatives.

“Cabot is a very solid company in a nasty environment,” said analyst Stephen O’Rourke of Deutsche Bank. “Cabot is a very well-run company with a solid balance sheet. It is a matter of weathering the storm.”

Chip makers across the board have experienced a decline in demand for products. O'Rourke said that what Cabot is experiencing is consistent with what is going on in the semi-conductor market.

Cabot does not provide guidance on earnings. The company now anticipates its fiscal 2009 operating expenses to be in the range of $110 million to $115 million, excluding the effects of the company’s pending acquisition of Epoch Material Co. Ltd. It had earlier projected operating expenses of $120 million to $125 million. In the fiscal year ended Sept. 30, 2008, Cabot's operating expenses were $125 million.

The stock closed at $21.71, down 80 cents.