The net loss, in line with generally accepted accounting principles (GAAP), dwarfed the GAAP net loss of $5.9 million, or 14 cents per share, that Magma posted in the year-ago quarter. The loss also eclipsed Magma's forecasted loss of between 65 and 67 cents per share.

Magma said its declining stock price, hurt by the economic downturn, dropped its market capitalization significantly below the recorded value of its assets, necessitating the impairment charge.

Magma's stock closed at $1.01 per share prior to the earnings release Thursday (Feb. 26). It's current 52-week high is $10.74.

Many technology companies have been hit by non-cash goodwill write downs in response to declining valuation on the equity market in light of the downturn.

Magma (San Jose, Calif.) reported revenue for the quarter of $30.7 million, a decrease of 45 percent year-to-year. Revenue exceeded guidance of $28 million to $29 million provided by the company last year.

"Magma beat revenue targets in the third quarter, an accomplishment we're quite pleased with given the difficult macroeconomic environment,'' said Rajeev Madhavan, Magma's chairman and CEO, in a statement.

Magma's pro-forma net loss for the quarter, excluding charges, was $4.3 million, or 9 cents per share, better than its guided range of a loss of 15 cents to 17 cents per share. Magma posted a pro-forma net income of $7.5 million, or 16 cents per share, in the year-ago quarter.

For its fiscal fourth quarter, which closes May 3, Magma expects revenue of $33 million to $34 million. The company expects to report a GAAP loss of 37 to 39 cents per share. Magma said it expects a pro-forma net income for the quarter of 1 to 3 cents per share.

For fiscal 2009, which also closes May 3, Magma if forecasting revenue of $146 million to $147 million and a GAAP loss of $2.95 to $2.99 per share. Magma had previously forecast a loss for the year of $1.99 to $2.03 per share.

Magma said it currently expects its pro-forma net loss for 2009 to be 19 to 21 cents per share.