Updated from 5:03 p.m. EDTKLA-Tencor ( KLAC) reported an 18% increase in fiscal fourth-quarter sales, but was tight-lipped about other financial results because of its ongoing investigation into past stock option-accounting practices. The San Jose, Calif., maker of semiconductor manufacturing equipment said revenue for its fourth quarter totaled $579 million, compared with $492 million a year ago and slightly above the average analysts' expectation of $574 million. While analysts polled by Thomson Financial expected KLA to earn 58 cents a share, the company did not disclose its net income or EPS. In a statement, CEO Rick Wallace said that operating profit, excluding stock-option expenses, was above the company's expectations for the quarter and that KLA experienced "a good quarter for customer orders with strong demand for our leading-edge yield management solutions." Memory-chip manufacturing drove KLA's equipment orders in the fourth quarter, accounting for 60% of all bookings. Flash-memory equipment represented half of those orders. The increasing popularity of flash memory, which retains data even when power is switched off, and the chip-manufacturing industry's push to make chips with smaller circuitry are boosting demand for KLA's inspection and measurement products, which allow manufacturers to increase yields. In a conference call with investors, management said KLA expects half of its orders by the end of the calendar year to be for equipment designed to make chips with a circuitry of 65 nanometers and below. The largest chipmakers are currently transitioning from 90-nanometer circuitry to more-advanced 65-nanometer chips. KLA executives also said the company is now aware of 17 new projects to construct chip-fabrication facilities featuring advanced, 300mm equipment -- up from its previous estimate of 15 such facilities. Customer orders in the fourth quarter were stronger than normal in Taiwan, Korea, China and Singapore, while Europe lagged its historical average.
The company ended the quarter with approximately nine months of product-related shipment and revenue backlog, while accounts receivables decreased by $16 million sequentially to $440 million. For the current quarter, KLA said it expected revenue to range between $610 million to $630 million, ahead of analysts' expectations of $606 million. Bookings in the first quarter, a slow part of the year for KLA, are projected to be down 10%, plus or minus 10%. In June, KLA announced that it had reached a preliminary conclusion that the actual measurement dates of certain past stock-option grants differed from the recorded dates. KLA is one of dozens of companies embroiled in the growing controversy surrounding the so-called backdating of stock options. KLA has received subpoenas from Justice Department lawyers in California and New York requesting information pertaining to stock-option grants between 1995 and 2001. KLA has not determined whether it will restate previous financial reports, although it will not file its 2006 annual report on time because of the investigation. KLA's management said that based on discussions with Nasdaq officials, it was confident that it would be able to avoid having its stock delisted as a result of the delay. For the full 2006 year, KLA said it generated $2.07 billion in sales, vs. $2.08 billion the year before. The company had cash and marketable securities of $2.3 billion at year-end. Shares of KLA gained 0.5%, or 22 cents, to $40.30 in extended trading.