KLA-Tencor Beats Estimates

Shares edge higher after hours.
Publish date:

Updated from 4:32 p.m. EDT


(KLAC) - Get Report

top line fell short of Wall Street's revenue target, but profit beat expectations as higher interest income and a lower tax rate helped the semiconductor-equipment maker during its fiscal fourth quarter.

Investors focused on the San Jose, Calif.-based company's bottom line, and lifted shares 1.2% to $49.80 on Island ECN in after-hours trading. Shares closed the regular session off 0.2% to $49.18.

KLA-Tencor's targets for the first quarter weren't overly strong, but executives cited positive factors, such as increasing factory use by the company's customers, that could play out over the next six months, eventually translating into improved demand for KLA-Tencor.

For the quarter ended June 30, the company posted net income of $105 million, or 52 cents a share, on sales of $492 million. During the same quarter last year, KLA-Tencor earned $96 million, or 48 cents a share, on sales of $450 million.

Analysts had expected earnings of 48 cents a share and sales of $497 million, on average, according to Thomson First Call. The tax rate was 20.5%, down from 25% in the same quarter last year, and interest income doubled to $15.7 million.

At the quarter's start, KLA-Tencor had predicted earnings between 46 cents and 48 cents a share, sales between $480 million and $500 million and orders that could be down 10% to up 10%.

Shipments, backlog, and deferred revenue fell sequentially for the San Jose, Calif.-based company while orders ticked up 1% to $427 million.

For the first quarter, which is typically KLA-Tencor's weakest period of the year, the company predicted earnings between 46 and 48 cents a share, sales between $465 million and $480 million, orders down 10% to up 10%, and flat shipments. Analysts had expected earnings of 46 cents a share and sales of $486 million.

CFO John Kispert said the new targets "reflect a continued trend to new 300-millimeter fabs and a shift to larger new projects." Also, he pointed out that orders typically drop 10% to 15% in the first quarter.

Orders from foundry and memory customers slipped sequentially in the fourth quarter, but Kispert said the potential existed for a rebound in the current period. Regarding the foundries, he said, "Our sales force is actually even more optimistic into the December quarter."

Executives also reiterated their interest in acquiring

August Technology


, which currently has a deal to merge with

Rudolph Technologies.

(RTEC) - Get Report

"Ours is still the superior offer that is on the table," said CEO Ken Schroeder, adding that he would like to discuss KLA-Tencor's proposal with the August board. "Hopefully, we'll be able to do that in the future," he said.

On Wednesday, August executives

stated that they remain committed to completing their deal with Rudolph.