Earnings Preview: KLA-Tencor

Jan.29.09 | About: KLA-Tencor Corporation (KLAC)

KLA-Tencor Corp. (NASDAQ:KLAC) is expected to report Q2 earnings Thursday, January 29 at market close, with a conference call scheduled for 5:00 pm ET.


The consensus estimate is (6c) for EPS and $393.96M for revenue, according to First Call.

Analyst Views

On January 12, KLA lowered Q2 revenue expectations to $390M to $400M because of deteriorating business conditions. The chip industry has been hard hit by a weak market for personal computers. CEO Rick Wallace says "Global economic uncertainty, weak consumer demand, and turbulent financial markets have led our customers to scale back production operations and reduce capital expenditures. Business conditions in our markets have deteriorated sharply in recent weeks, leading to unanticipated shortfall in quarterly new orders, revenues and earnings." In terms of EPS, the company said it expects a loss from operations for the quarter, along with a non-cash impairment charge on some goodwill and other intangible assets.

Goldman expects KLA to report results in-line with its negatively revised guidance for revenues and orders of $235M to $245M (-25% qoq to -28% qoq). The firm also expects Q3 guidance to come in below the Street consensus of (19c) on $293.28M in revenue, and expects a fairly bearish tone from management. Goldman believes that the weak Q3 guidance is largely priced into the stock and they are encouraged by the fact that Semiconductor Capital Equipment stocks have not been reacting negatively to bad news during the Q4 CY08 earnings season. Goldman continues to expect Q1 CY09 to be the weakest order quarter this cycle and expects some stabilization in orders in Q2 CY09, which should be a positive catalyst for KLA's shares.