Updated from 5:16 p.m. EDT

SAN FRANCISCO -- KLA-Tencor's ( KLAC) profit declined 35% in the fiscal first quarter because of a hefty tax expense.

And the San Jose, Calif.-based provider of chipmaking equipment pointed to "choppy" conditions in the memory market as it served up a disappointing outlook for the current quarter.

"While we expected some weakness in memory in second half of 2007 , it turned out to be more widespread than anticipated," said President John Kispert said in a post-earnings conference call.

The upshot is that KLA's customers are delaying orders, company officials said.

According to KLA, orders in its recently completed fiscal first quarter were down 32% sequentially, although it noted that this is traditionally a tough time of year for bookings.

In the current quarter, KLA said orders are expected to be up 20%, plus or minus 10%. And the company said revenue in the current quarter will range between $625 million and $640 million, with EPS between 68 cents and 73 cents.

Analysts polled by Thomson Financial were looking for $676 million, with EPS of 75 cents.

Shares of KLA slipped $1.91 cents, or 3.6%, to $50.68 in extended trading Thursday.

KLA makes measurement and inspection tools used in the chip manufacturing process. Such capabilities are increasingly in demand as semiconductor firms race to produce chips with ever-finer circuitry and strive to overcome the technological challenges and manufacturing defects inherent in the process, according to KLA executives.

But a glut of DRAM memory chips, and the resulting crash in prices, has caused many of the large chipmakers to pare their capital spending plans in recent months.

"Folks who had planned on purchasing stuff maybe in the December quarter, and installing in the March time frame are now thinking more like late Spring, Summer time," said Kispert.

Altogether, he estimated that as much as half a quarter's worth of KLA's orders may be pushed out until sometime in 2008.

Even so, KLA executives said the company would outgrow the broader chip equipment industry in 2007 and were confident that the same could be achieved in 2008.

In the three months ended Sept. 30, KLA nudged past Wall Street's top-line estimates with $693 million in revenue vs. the $682 million expected by analysts.

The company earned net income of $88.1 million, or 46 cents a share, in its fiscal first quarter, compared with net income of $135.9 million, or 67 cents a share, at this time last year.

KLA said the earnings included a $47 million tax expense associated with the implementation of its global manufacturing strategy, which it did not incur at this time last year, as well as $12 million in acquisition-related charge, as well as stock compensation expenses and certain other charges.

The average analyst expectation called for KLA to earn 76 cents a share in its fiscal first quarter, including stock compensation expenses.