Does KLA-Tencor’s (KLAC) Quarter Signal Chip Turnaround

July 27, 2007 by Douglas A. McIntyre

KLA-Tencor (KLAC) makes equipment to track quality and manufacturing process for the semiconductor business. And, its sales may be a leading indicator for how that industry is doing. If semi companies are spending more money with KLAC, their prospects may well be improving.

The company did indeed have a good quarter. KLAC reported net income in its fiscal Q4 ending June 30 of $147 million, and earnings per diluted share of $0.75 on revenue of $736 million compared to  net income of $132 million or $0.65 per diluted share on revenue of $579 million in the fourth quarter of fiscal 2006. Operating income for the fourth quarter of fiscal 2007 includes $75 million in pre-tax charges.

The company’s CEO indicated that revenue would be improving:  "Our product pipeline has never been stronger, with six new products launched in the June quarter. As we go forward, we are developing more innovative and cost-effective solutions to address critical yield challenges facing customers as they transition to 45nm and beyond."

If so, a lot of chip companies are coming out of a slump.

Douglas A. McIntyre