Debra A. Wasser – Senior Vice President of Corporate Communications and Investor Relations John R.

Peeler – Chief Executive Officer John F. Rein, Jr.

– Chief Financial Officer

Brett Hodess – Merrill Lynch Tim Arcuri – Citigroup Bill Ong – American Technology Research Mark Moskowitz – JP Morgan Matt Petkun – DA Davidson Nicholas Tishchenko – Global Crown Capital Mark Miller – Brean Murray

Joining me today are John Peeler, our Chief Executive Officer, and Jack Rein, our Chief Financial Officer. Today’s earnings release was distributed at 4:00 p.m.

this afternoon. If you haven’t yet seen the press release, please visit the veeco.com website or call 516-677-0200, ext.

1305 to get a copy. We have also prepared an overview of our financial results, including historical segment information for 2007.

This presentation can be found on the Veeco website. This call is being recorded by Veeco Instruments and is copyrighted material.

It cannot be recorded or rebroadcast without Veeco’s express permission. Your participation implies consent to our taping.

To the extent that this call has got expectations about market conditions, market acceptance, and future sales of the company’s product, future disclosures, future earnings expectations, or otherwise makes statements about the future. Such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made.

These factors are discussed in the business description in management’s discussion and analysis section of the company’s report on Form 10-K and in our report to shareholders, in our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K, and press releases. Veeco does not undertake any obligation to update any forward-looking statements, including those made on this call, to reflect future events or circumstances after the date of such statements.

During this call management may address non-GAAP financial measures. Information regarding such non-GAAP financial measures, including reconciliations to GAAP measures of performance, is also available on our website.

I would now like to turn the call over to John for opening remarks.

I am pleased to be able to report of Veeco’s solid progress for the first quarter of 2008. This afternoon we reported inline revenues and better than expected earnings due to our restructuring and cost containment efforts and good progress on gross margin improvements.

I am confident that we are on track to improve Veeco’s performance on both the top and bottom line in 2008. As stated in our press release, Veeco reported first quarter revenue of $102 million, which is in line with our guidance of $98 million-$105 million.

Revenues were up 3% over the first quarter of 2007. First quarter 2008 bookings were $109.3 million, at the midpoint of our guidance of $105 million-$112 million.

And also up about 3% from the prior year. We experienced strong revenue growth versus the prior year in our LED and Solar Process Equipment business, which is the combination of our MOCVD and MBE product lines.

First quarter LED and Solar revenues were $42.1 million, up nearly 90% from $22.4 million last year. This business now represents our largest segment at 41% of revenue.

We are also quite pleased with the profitability of this business, which reported Q1 EBITDA of $8.6 million and gross margin of 41%. During the first quarter we received acceptance on all of our newest generation K465 MOCVD gallium nitride systems, which were shipped to customers in A-Pac, Japan, and Europe during 2007.

LED and Solar Process Equipment orders were $38.7 million, up 6% compared to $36.4 million booked in last year’s first quarter. First quarter orders included several multi-unit orders and some key strategic penetrations of Tier 1 LED customers.

Data Storage Process Equipment, the combination of our ion beam and slider product lines, reported revenues of $24.1 million, a decline from last year’s $35.7 million. As per our prior guidance, we had anticipated weak Data Storage revenues and profitability in the first half of 2008.

This business reported an EBITDA loss of $1.4 million in the first quarter and gross margins of 35.3%. While our first half Data Storage revenue starts out slowly, we own significant backlog to fuel revenue and profit recovery in this business in the second half of 2008.

And in fact, we currently anticipate that Data Storage will return to at least break-even level in the second quarter due to improved revenue and the benefit of our right-sizing activities. Data Storage orders were $40.6 million in the first quarter, an increase of 27% compared to the $32.2 million reported last year, and up 13% sequentially.

I think our solid bookings this past quarter in Data Storage is evidence that we made the right choices in streamlining our product lines and we remain well aligned to the current customer technology requirements. Our key Data Storage customers have shown commitment to their wafer size and technology-related programs and lower costs of ownership requirements.

For example, we experienced strength in orders for PVDi, IBD, IBE, as well as our back-end slider products. In Metrology, revenues were $36.1 million, down 12% from the $41.1 million in the first quarter of last year, primarily due to the weak semiconductor environment.

However, the profitability of this segment improved significantly on a sequential basis with gross margins increasing from 39.3% to 46.6% and EBITDA recovering to $1.8 million from a loss in the fourth quarter. Metrology bookings were $30 million, the result of seasonally slow scientific research and industrial spending and continued semiconductor industry softness.

We believe that the normally weak first quarter in our research and industrial products was exacerbated by the difficult economic environment. Veeco’s earnings per share, excluding amortization and restructuring charges, was $0.09.

This was ahead of our guidance range due to better than forecasted operating spending levels, which as been a significant focus area for us. In addition, our gross margins were 41.7%, ahead of our guidance of 39.0% and up compared to the fourth quarter gross margin of 37.9%, even with the lower revenue base.

Jack will provide a bit more detail about this better-than-forecasted earnings result and we are certainly pleased that profitability and gross margins are heading in the right direction. In addition to the improved financial metrics, I would like to take a few moments to highlight some of our key accomplishments for the quarter.

First, we received key field sign offs of our new K465 MOCVD system and are receiving positive customer feedback on the high margin this tool delivers for high brightness LED manufacturers due to its automation, higher throughput, and excellent yield. Our competitors’ tools are producing either 138 or 90 wafers per day, depending on the system, while the TurboDisc K465 produces over 200 wafers per day.

Second, we began shipping our first thermal deposition sources for the SIG’s solar market this quarter. While we’re not permitted to name these customers, our sources are currently being sold to several leading thin film SIG’s manufacturers.

Third, we shipped our first PVD high-rate alumina deposition tool to an important hard disc drive customer. Fourth, Mark Munch joined Veeco in February as our new leader for Veeco Metrology.

Fifth, we received customer acceptance of our beta InSight 3D Auto AFM at a leading semiconductor device manufacturer. InSight is the only metrology system on the market with the accuracy and precision required for non-destructive high-resolution three-dimensional measurements for 45nm and 32nm semiconductor features.

Six, we completed the move of our corporate headquarters from Woodbury into our Plainview, New York, Ion Beam facility, which will save the company nearly $2 million on an annual basis. Seventh, in our optical metrology products during the first quarter we made our first commercial shipments of two important new products.

These are the HD9800 production optical profiler for the data storage industry, and the new NT9100, which is the benchtop interference microscope that’s experiencing strong early adoption that key industrial customers, including those in Solar and LED. Eight, in our Nano-Bio AFM business we launched six new advanced electrical and mechanical characterization modes and features for our highly successful ANova AFM.

We also announced an exciting new MG mode for our Nano-Bio products called Harmonics. Harmonics rapidly provides quantitative nanoscale material property maps and will be incorporated into several of our scanning probe microscope products.

And lastly, we completed our SAP implementation in Japan and now all of Veeco’s global sites are up live on SAP. So in summary, we made excellent progress in each of our businesses during the first quarter and reported solid results for the company overall.

I will now turn to our guidance for the second quarter. As stated in our press release, we currently anticipate that revenue will increase to $102 million-$110 million.

Veeco’s earnings per share is forecasted to be $0.05-$0.11 on a non-GAAP basis. We expect second quarter 2008 bookings to improve from the first quarter with a range of $110 million-$118 million, driven by sequential bookings increases in LED and Solar Process Equipment and Metrology segments.

In markets high-brightness LED remains strong with customers continuing to invest in capacities. In Solar, our E475 MOCVD System with 50% more throughput than the competitor is helping to manufacture some of the worlds’ most efficient, low-cost III-V solar cells.

Q1 bookings also included both MBE systems and SIG sources. We think the thin film SIG’s market offers a very promising growth opportunity for Veeco, giving the potential for increased efficiency in lower-cost panels than silicon.

As stated, we’re increasing our R&D and engineering investments in our LED and Solar businesses in 2008. In our Data Storage segment, while we anticipate further lumpiness in order flows as customers manage CapEx on a quarterly basis, we are confident that there remains a healthy unit demand for hard drives and thin-film magnetic heads that should enable Veeco to continue to have a growing and profitable equipment business.

In Metrology, we currently forecast a sequential improvement in bookings due to an anticipated pick up in our Nano-Bio and Optical Instrument product lines due to strong customer interest in some of our newest products. In Optical we’re also seeing some positive bookings patterns for HD lines from key data storage customers.

However, overall semiconductor market conditions remain extremely weak and while we have seen a recent increase in the number of semiconductor customers sending in their wafers for testing, we are experiencing very challenging headwinds for gaining traction in our new InSight 3D Auto AFM system. We are not anticipating a meaningful improvement in this business at least through the first half of the year.

For Metrology overall, I’m glad to have Mark Munch on board as the new leader for this business. I think he is making good progress and increasing the group’s customer focus and identifying a growth and profit improvement path for the business.

Some initial focus areas for Mark are on improving our marketing, pride definition, and customer satisfaction, and implementing continued gross margin improvement programs. So, in summary, we expect to make good progress in the second quarter for Veeco on both the revenue and bookings front and are on track for a better 2008 with a plan to deliver steady revenue increases and profitability improvement.

I would now like to turn the call over to Jack to review some details on our P&L and balance sheet.

First quarter 2008 orders improved $109.3 million, up 3.2% from the first quarter of 2007. LED Solar Process Equipment represented 35.4% of orders at $38.7 million.

Data Storage Process Equipment represented 37.2% of orders at $40.6 million. And Metrology represented 27.4% of orders at $30 million.

Compared to the first quarter of 2007 we expanded to 6.3% increase in LED Solar Process Equipment orders at 25.7% increase in Data Storage Process Equipment orders, and a 19.4% decrease in Metrology orders. Veeco’s book-to-bill ratio was 1.07:1 for the quarter.

Sales were $102.3 million, up $3.1 million, up 3.2%, from the 3-months ended March 31, 2008, versus the first quarter of 2007. We experienced a $19.7 million, or 88% increase in the LED and Solar Process Equipment sales due to positive market acceptance of our latest generation of gallium nitride and arsenic phosphide tools.

This was partially offset by an $11.6 million, or 32.5% decrease, in Data Storage Process Equipment sales from a timing delay in customer demand in the data storage industry. In addition, Metrology sales declined $5 million, or 12.1%, due to weak revenues from [inaudible] semiconductor Army search markets.

Backlog at March 31, 2008, was approximately $179.3 million, up $5.8 million from the December 31, 2007, level. First quarter 2008 backlog adjustments totaled $1.2 million.

Gross profit was $42.6 million, or 41.7% of sales for the quarter, up sequentially from 37.9% in the fourth quarter of 2007, but down compared to the 44.1% in the first quarter of 2007. The decrease in gross profit principally resulted from a lower proportion of Metrology and non-system sales, both of which have higher average gross margins.

LED and Solar Process Equipment gross margins were 41%, up compared to 39.8% in the fourth quarter of 2007, and 38.2% in the first quarter of 2007, mainly due to significant increases in sales volume. Data Storage Process Equipment gross margins were 35.3%, up sequentially from 34.9% in the fourth quarter of 2007, but down from 41.6% in the first quarter of 2007.

The 6.3% margin decrease compared to the first quarter of 2007 was due to lower sales volume and unfavorable product mix and manufacturing costs. Metrology had a 46.6% gross margin, up from 39.3% in the fourth quarter of 2007, mainly due to increased automated AFM sales volume, more favorable product mix, and reduced spending.

Metrology gross margin was down from 49.4% in the first quarter of 2007, principally due to the $5 million of lower sales volume. SG&A was $22.6 million, or 22.2% of sales, compared to $22.8 million, or 23% of sales, in the first quarter of 2007, and $21.6 million, or 20.2% of sales, in the fourth quarter of 2007.

R&D expense totaled $14.7 million, a decrease of $700,000 from the first quarter of 2007 mainly due to a more focused approach to data storage product development. R&D remained flat with the fourth quarter of 2007.

Overall operating expenses, excluding the restructuring and asset impairment charges and amortization, totaled $37.4 million, or 36.5% of sales, compared to $38 million, or 38.4% of sales, in the first quarter of 2007. This decline was mainly attributable to the reduction in compensation-related expenses, lower travel and entertainment, and depreciation resulting from our overall cost-reduction initiatives.

On a sequential basis operating expenses increased due to higher bonus, profit sharing, and [inaudible] accruals. Amortization expense totaled $2 million in the first quarter of 2008 versus $3.9 million in the first quarter of 2007.

The decrease was mainly due to certain technology-based intangibles becoming fully amortized during the second quarter of 2007. During the first quarter of 2008 there was a $2.9 million restructuring and asset impairment charge related to the consolidation and relocation of our former corporate headquarters into our Plainview, New York, facility and a $300,000 charge for personnel severance cost.

First quarter 2008 GAAP net loss was $1.6 million, or $0.05 per share, compared to net income of $300,000, or $0.01 per share, in the first quarter of 2007. EPS, excluding amortization expense, restructuring items, and utilizing a 35% tax rate for the quarter, was $0.09 compared to guidance of $0.00-$0.06 and $0.10 in the first quarter of 2007.

Going outlook for our guidance for the second quarter of 2008 is for revenues to be in the range of $102 million-$110 million with earnings per share of ($0.02)- $0.07 on a GAAP basis and earnings per share of $0.05-$0.11, excluding amortization of $2 million. The non-GAAP EPS uses a 35% tax rate.

We expect gross margins to stay in the 41.5% range and operating expenses to stay at the 36.5% range, as the high end of our revenue guidance, and at 38% at the low end of our revenue guidance. The forecast for the second quarter of 2008 operating expense dollar increased related to annual salary raises effective the beginning of April and bonus accruals, as well as critical new hires.

For full year 2008 we are anticipating revenue growth at a minimum of 10% to $440 million. Regarding our balance sheet, cash and equivalents totaled $114.4 million at March 31, 2008.

We used $2.7 million in cash during the first quarter of 2008 mainly as a result of the [inaudible] of cash received at quarter end, as we received $11 million of cash on the first day of the second quarter. Accounts receivable DSOs for the first quarter was 68 days, an increase from December 31, 2007, but well below industry averages of 78 days.

During the quarter inventory increased by $6.6 million to $105.2 million with a turnover of 2.3x. This increase was primarily due to an increase in build up of inventory in Data Storage Process Equipment to support the increase in customer orders for second and third quarter scheduled shipments.

Capital expenditures were $3.1 million for the first quarter of 2008 and depreciation expense totaled $3.3 million in the quarter. I will now turn the call back over to John.

Thank you for your patience during our prepared remarks. We would like to now start the question and answer session.

Can you talk a little bit about where you think margins are going to move from here, since you’re obviously stronger based on your restructuring, as you move into the second half and we start to see the volume pick up on the drive side as well. Where do you think you might go to in margins in the second half of the year?

And the second question is, in the LED side of the business orders continue to be pretty strong and all, do you see any digestion period in the LED side of the business or do you think it’s going to continue to move up? This quarter obviously was off a little bit on an order basis but still quite strong.

Brett, on the gross margin prior guidance we had indicated about a point per quarter and we got ahead of that in the first quarter so we’ve guided to a somewhat flat second quarter. We still stand by that guidance that we exit the year, about 2 points above where we currently are.

Brett, on the LED side, we have a strong funnel, a lot of good opportunities in the pipeline. We haven’t seen any signs of a slow down and we’ve seen strong LED bookings now for about 2 years.

We do anticipate that at some point it will become more cyclical in nature but we have not yet seen that. We did enter the year with a very solid backlog so our ploy in will allow for a certain level of slow down.

Jack, on the inventory, the increase is specifically due to the build of the data storage items that you’re booking now for second half shipments, is that right?

That’s correct, Brett. Yes, we expect inventories to be down several million dollars in the next quarter, second quarter, so it was a temporary build for the order ramp that we’ve seen in data storage.

John, as I look at the revenue guidance for the year I’ve got to consider two factors, one, that this is the fifth quarter in a row where your bookings are greater than your revenue, and that I also consider in LED, you’re basically booking and you’re revenuing a rate that would, if you just flat-lined that, that would equate to an annual number that is something in the 160 range and you’re guiding that business closer to 140. So I’m wondering, is there some conservatism built in in one particular part of the business?

Because certainly, at least in LED, it looks like you’re well ahead of your guidance. So I’m wondering if maybe you’re worried about that business falling off later on in this year or in data storage or something.

Tim, on the LED and Solar side I do think we have a reasonably conservative plan. We did allow for the fact that revenues, or orders, might flatten, or even take a dip, during the year.

But overall if you look at our last three or four quarters of bookings and you average it out, it’s a pretty reasonable number with respect to the projections for the year.

As you look at the LED margins, do you think that you guided the full corporate margin to be about 200 basis points higher exiting the year than where it is today, but specifically in LED, at like-for-like revenue, so if you exited the year at the same revenue level, do you think that the margins in that business would be appreciatively different than they are today?

I think that we’ve received a 41% margin for the first quarter and I think that we could see some progress, but we’re not at this point projecting that.

Jack, so you would say that there’s not a whole lot more up side.

There may be up side, but at this point we’re guiding conservatively here.

On the MOCVD tools, what’s your percentage bookings mix between gallium nitrade-based tools and gallium arsenic phospide-based tools? And also, have you been able to raise prices on some of the new tools that you’ve announced?

Bill, we have not raised prices recently and I don’t know if we have that split. I don’t think we’re prepared to give you that at this time.

But clearly, the blue-green is by far the highest percentage.

So you probably expect at least on selling on more gallium nitride-based tools, just based on that qualitative comment?

Yes.

And then what portion of the revenues is geared towards the solar applications?

It’s a relatively small percent. On the MOCVD systems.

They are predominantly going into the LED marketplace with a smaller number headed into the III-V multi-junction solar cells, along with our thermal sources in the MBE side of the business.

Can you give me a dollar number or you’re not comfortable with sharing that?

We’re not splitting things out to that level.

John, can you give us a sense of what percentage of the overall solar market is SIGS, and where do you see that percentage going over the next couple of years? And then as a follow up to that question, as relates to Veeco can you talk more about new products to address other than [inaudible ]floor technologies, outside or is it mostly within your focus within SIGS?

So, SIGS is really in the early stages of the technology life cycle. It’s certainly a relatively small percentage of the overall total at this point.

As is thin film. But thin film and SIGS are projected to grow faster than the market.

The advantage of SIGS is potentially higher efficiencies and good cost per watt figures. So early stage technology expecting to grow rapidly and that’s our area of focus for our thermal sources.

Whereas our MOCVD systems are focused on the III-V multi-junction solar cells. So early, but we think it offers very good growth opportunities and it’s where a lot of investment is going at this time.

And then the second question, related to Data Storage, can you give us a sense in terms of the mix of technology buys versus production related for the quarter? And how that compared to last quarter?

The buys in Data Storage predominantly focus on either new technologies or move to larger wafer size to ultimately enable greater efficiency in building data storage devices or thin film magnetic heads. So they are all related to technology or wafer size as opposed to general capacity improvement.

And does that help your margins out over time, with your scaled out?

It should help our margins over time. This quarter was a particularly low revenue quarter for us in Data Storage.

We predicted that and we have been quite clear that we expected the second half of 2008 to be much stronger than the first half. We have the backlog to deliver that and we are seeing the ongoing improvement here as we go from Q1 into Q2.

So I think you will see the margin up tick as the volume goes up there.

John, could you comment a little more specifically on the semiconductor portion of the Metrology business? That’s obviously a market where we’re hoping to see the new auto AFM tool capture some new customers.

What does the progress look like there? And when I look at the combined number for the what you’re calling Metrology segment, it looks like either that semiconductor pieces was even weaker than it was last quarter or the rest of the business is even weaker, the core Metrology business.

So can you help us see what’s going on there?

So on the semiconductor side of Metrology, really predominantly served by our auto AFM, which we launched our new InSight platform in December. We’re getting very good feedback from the market on that platform and we received our acceptance at a large semiconductor company on our first beta unit there this quarter.

The customers like the product. On the other hand, as you probably know, the semiconductor market is down pretty seriously and expected to be a significantly down year, so we’re in a situation with a new product with some exciting capabilities but not a lot of money going into the market and it’s going to take some time for this to take off.

So I think we’re making progress but the market is tough so it’s going to take some time here.

And when you look at that semiconductor segment in particular, in 2004, 2005, 2006 you would run orders and revenues in the $60 million range. Is that a reasonable target for this business going forward, and within that number how much of the orders actually came from the memory market?

Because when I look at the semiconductor market overall and the spending, the real weakness that we’re seeing, at least, is primarily on the memory side.

I don’t believe we ever got to the $60 million range in that business and clearly we wouldn’t be predicting anything in that range any time soon here based on the conditions. The applications split between memory and non-memory so we can play on both sides.

But I think it’s going to take some time to get back into solid growth on that side of the business. On the auto AFM side of the business.

Now, our other Metrology products have a much broader market and to the general purpose, research and scientific data storage and really a lot of different industrial markets so a much better diversification on that side and some good new products that we think will catch on and drive our growth ultimately.

The backlog at the end of the quarter?

Matt, while Jack is looking for that, just to clarify, the Metrology number, there was no change in the segmentation that we’ve been giving. We’ve always given Metrology as a separate segment of Veeco.

The backlog was $179.3 million.

My question is related to the tools going into LED markets. What is the major differentiator between your tools and your competitors?

What is your competitive environment? You did a great job in 2007 gaining such an incremental market share.

What is happening right now and where do you see yourselves versus your German competitor?

I think it’s been a good quarter for us in many ways because our new system that was launched in 2007, the K465, saw acceptances from all of its early customers. So, I think that’s really a good accomplishment for us.

The advantage of our system is really throughput and productivity. It enables a more rapid production of LEDs in terms of units per hour.

So, we think it’s a really excellent product and now that we’ve gotten through this acceptance phase we have really solid expectations that we’re going to continue to grow and do well in this market. Certainly a competitive market out there and we battle for every quarter and we think we’ve got a really good future here with this new product.

Can you describe the competitive environment? Let’s say there was another big guy and the second big guy is Veeco, what else is in the market?

First of all, I think we know our German competitor was there earlier and is ahead of us in terms of number of installed systems and is the market share leader. We’re the clear leader beyond that and a very strong number two and I think doing very well.

We hear rumors about other companies attempting to enter the market and we have a Japanese competitor, Nippon Samsung, who has some share in certain Japanese customers, predominantly. But we don’t really see them in other places.

So I think you’ve got Extron and then Veeco and then Nippon Samsung and beyond that all we’ve really seen is rumors in terms of who might be working to get into this market.

So basically you are optimistic for further gain of market share?

Yes.

You mentioned that you had confidence with your backlog Data Storage sales would improve but we’ve seen recently data storage companies seem to be getting more conservative. Actually Western Digital cut their CapEx spending.

Just wondering, what do you feel about orders? Do you feel orders will continue to grow there?

I think on the data storage market, first of all a couple of things. We hit the year with a very solid backlog, we had a very strong book-to-bill ratio in Q1.

We had a $40 million quarter in orders and I know there has been some mixed statements by some of the top players in the market. But overall with the programs that we’ve been providing that are either technology-based or productivity improvement that have quick pay backs, we have seen strong demand for those products.

We’ve also seen from some of the top customers who were putting a lot of money into facilities last year planning to spend more on actual equipment this year. And so even with the same amount of CapEx doing some shift.

So, we think we’re on track. We had a conservative plan for the year, less than 5% growth.

We do think we’re on track to make our plan.

What are the head manufacturers in terms of the transition of larger wafer sizes?

We are seeing key players following through on their programs to transition to larger wafer sizes, so we’re seeing them stick to their plans and move ahead. This is a multi-year transition, it’s not a whole scale replacement of an existing product but it’s add-to existing product to get better efficiencies and to support future capacity.

So, everything we’ve seen is positive on that front.

Thank you very much. I want to thank you all for joining us today.