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KLA-Tencor Beats Estimates

But results fall from a year earlier.

Updated from 5:02 p.m. EDT


(KLAC) - Get Free Report

reported a stronger-than-expected fiscal first quarter, but the company's soft guidance pushed its stock down.

Shares of the company, which had closed down $1.20, or 2.48%, to $47.24, ahead of the earnings announcement, plummeted another 8.9%, to $44.12 in after-hours trading.

The San Jose, Calif., provider of chip-making equipment earned $101 million in net income, or 50 cents a share, excluding the costs of expensing employee stock options. The company had forecast EPS between 46 cents and 48 cents, while analysts polled by Thomson First Call were expecting 48 cents a share. KLA recorded a $24 million charge, or 12 cents a share, related to equity-based compensation, resulting in net income of $76.7 million, or 38 cents a share.

Revenue came in at $484 million for the quarter, higher than KLA's own projections of $465 million to $480 million, as well as analyst expectations of $476 million. Sales to Taiwan and Japan were particularly strong in the quarter, seasonally KLA's weakest, while sales to Europe and Korea were down from historical levels. However, sales and earnings were down from a year earlier, when KLA earned 58 cents a share on revenue of $519 million.

The company's guidance for its fiscal second quarter was not as rosy as expected. KLA forecast revenue between $455 million and $470 million next quarter, down substantially from the $533 million it recorded in the year-ago period. Analysts were expecting $480 million.

Still, there was a ray of light in the company's projected orders for the next quarter, which it said could rise 5%, plus or minus 10%. "Orders are what really matters," said Bill Ong, an analyst at American Technology Research. "People would like to see a stronger slope, but I think it's a sign that business is picking up," said Ong, who does not have any financial position in the company.

In a conference call with analysts, CEO Ken Schroeder also offered an optimistic outlook, citing the consumer electronics and information technology markets as key drivers of the company's growth. Flash memory, which is increasingly being used in electronic gadgets, like MP3 players and cell phones, will be particularly important for the company going forward. KLA, which makes quality inspection and measuring tools used by chip manufacturers, said sales of Flash memory-related tools could account for more than one-quarter of its orders next quarter.

Schroeder said KLA was taking a wait-and-see approach regarding its plan to acquire

August Technology


, in light of August's recent announcement that it was restating quarterly earnings. "We're going to wait until that plays itself out and we see exactly what that means in terms of the value of the company," Schroeder said. Earlier this year, KLA offered to pay $11.50 a share to acquire August, which was already in a merger agreement with

Rudolph Technologies

(RTEC) - Get Free Report