The Gauntlet: What analysts say about KLA-Tencor
Mark LaPedus
10/23/2003 12:00 PM EST
URL: siliconstrategies.com
SAN JOSE -- KLA-Tencor Inc. managed to beat Wall Street's estimates, when the chip-equipment maker reported its results on Wednesday. But analysts were also disappointed with the company, as it disclosed a shortfall in orders for the quarter.
The disclosure prompted analysts to lower their forecasts for KLA-Tencor, the leader in inspection and metrology equipment. The company posted sales of $317.97 in its fourth fiscal quarter, up 3 percent from $308 in the previous period, but down 15.3 percent from $375.5 million in the like period a year ago. The company posted a profit of $36.8 million, or $0.19 a share, compared to $29 million, or $0.15 a share, in the previous period, and $51.3 million, or $0.27 a share, a year ago (see October 22 story).
Vijay Rakesh, an analyst at research firm Berean Capital Inc. in Chicago, said KLA-Tencor meet its forecast, as it reported earnings of $0.18 versus consensus of $0.17, and revenues of $317.9 million versus consensus of $316 million.
There were concerns and disappointments about the quarter, however. "Orders in the (quarter) were up only 1 percent QoQ, versus guidance of 5 percent, due to two order pushouts of reticle inspection tools in U.S and Japan," he wrote in a report issued today (October 23, 2003).
The company realized its orders from Japan, Korea and Taiwan. Some 45 percent of the orders were from memory houses, while 70 percent went to 300-mm fab applications, he said.
Its outlook appears to be conservative. "Outlook for the December quarter is for orders up 5 percent, revenues of $320-325 million, and EPS of $0.18-0.19," he said.
As a result, Rakesh is revising his near term EPS estimates for fiscal 2004 ending June, from $1.06 to $0.92, but maintaining fiscal 2005 at $2.08, which is at the high end of estimates.
Cristina Osmena, an analyst with Needham & Co. Inc. in New York, also lowered her forecast for the company in fiscal 2004. "We believe the mild shortfall to third quarter orders does not reflect on the quality of the company's position within its addressable market but rather 1) a typical shift in the order share to capacity tools rather than yield ramping tools and 2) the spottiness of the upturn," Osmena wrote in a report issued today.
"Nevertheless, the tepid order and revenue guidance affects estimates going forward and with the stock closing near its 52-week high, we recommend that investors remain on the sidelines while the news is digested by the market," she said.
KLA-Tencor is still in a strong position. "The company stated that guidance is conservative and that strong order performance should transpire in the December or March quarter, depending on the timing of several large projects currently anticipated in March," she said.
The company's shortfall in the quarter "underscores lumpy order patterns/poor visibility," according to a report from SG Cowen Securities Corp. "Stock likely to fall, but KLA is well position to ride the upturn." |
