Accuray Inc. (ARAY) reported fiscal third-quarter earnings per share of 4 cents, beating the Zacks Consensus Estimate of 1 cent and the year-ago earnings of 2 cents.

Sales

Total revenues in the third quarter declined 15.3% year over year to $51.9 million. Lower revenues can be attributed to lower demand for the company’s CyberKnife Robotic Radiosurgery Systems. The company installed six new systems in the third quarter, versus eleven in the prior quarter. Furthermore, Accuray bagged fourteen orders for its CyberKnife Robotic Radiosurgery Systems in the third quarter, compared to eighteen in the prior quarter.

Product revenues declined 17.6% year over year to roughly $33.8 million. Services revenues declined 2.0% year over year to $17.5 million.

Margins

Gross margin declined 60 basis points (bps) year over year to 48.9%. Selling and marketing expenses as a percentage of sales declined 480 bps year over year to 13.8%. Research and development expenses as a percentage of sales declined 20 bps year over year to 14.9%. General and administrative expenses as a percentage of sales increased 50 bps year over year to 14.9%.

Lower operating expenses helped Accuray improve its operating and net margins. Both operating and net margins increased 390 bps and 240 bps year over year to 5.3% and 4.4%, respectively.

Balance Sheet

Accuray ended the third quarter with cash, cash equivalents and short-term investments of roughly $117.6 million, an increase of 15.9% in the first nine months of the fiscal year.

Outlook

Accuray expects total revenues in fiscal 2010 to be at the lower end of the $220 million to $230 million range.

Headquartered in Sunnyvale, California, Accuray designs, develops, and sells the CyberKnife System, an image-guided robotic radiosurgery system used for the treatment of solid tumors. The CyberKnife System is the first and only commercially available intelligent robotic radiosurgery system designed to treat solid tumors anywhere in the body. This is as an alternative to traditional surgery.

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