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Updated from 5:53 p.m. EDT


(KLAC) - Get KLA Corporation Report

managed a two-penny upside surprise in its fiscal third quarter, while posting sales in line with expectations.

However, the chip equipment company's guidance for the June quarter is below Wall Street's projections. KLAC sells measurement and inspection tools to help prevent defects from occurring in the semiconductor manufacturing process.

In the just-ended March quarter, revenues of $304 million remained 15% below last year's levels.

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EPS of 14 cents was 18% below earnings from a year ago, although it beat the guidance of 12 cents given by the company in January and of the consensus gathered by Thomson Financial/First Call.

CEO Ken Schroeder said cost reductions had helped reduce operating expenses 11% on a sequential basis, saving an estimated $15 million in the March quarter.

For the June quarter, orders are expected to stay flat. Revenues should be flattish too, in the range of $300 million to $310 million. EPS should total around 14 cents.

Analysts were expecting sales of $319 million with EPS of 15 cents, according to Thomson Financial/First Call.

On the conference call, Schroeder predicted the semiconductor equipment industry will see sales grow around 5% in 2003, following two down years.

After hours, shares slid 74 cents or 1.8% to $40.18.