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KLA-Tencor: A New Acquisition To Add To The Company's Revenues

Feb. 01, 2019 7:24 PM ETKLA Corporation (KLAC)3 Comments
David Krejca profile picture
David Krejca


  • KLA-Tencor is a global semiconductor company.
  • The company has rapidly grown through acquisitions, and its latest portfolio addition is likely to move the business ahead.
  • Valuation suggests the company’s shares are substantially undervalued.

Investment thesis

KLA-Tencor (NASDAQ:KLAC) is a leading semiconductor equipment and services supplier with an extensive acquisition track record. Despite a relatively high level of debt, the company's new acquisition is set to add significant value to the company's portfolio.

Corporate profile

KLA-Tencor, rebranded as KLA Corporation earlier this month, is a leading supplier to the semiconductor manufacturing industry. The company's portfolio includes a wide range of products and services, including process control systems related to the production of wafer, reticle, integrated circuit, and other nanoelectronics solutions. The company operates two revenue segments - product and service - which currently account, respectively, for 78.3 and 21.7 percent of total revenue. In 2018, most of the company's revenue came from Korea (29 percent), China (16 percent), Japan (16 percent), Taiwan (16 percent), North America (12 percent), and Europe and Israel (7 percent).

Growth through acquisitions

Over the recent decades, KLA-Tencor has grown extensively through acquisitions, with 23 companies successfully added under the company wings. Through the years, the company developed an ability to identify and acquire compatible companies more or less consistently, with no more than three transactions in a year.

Closed Acquisitions (the last 9) Year
MicroVision 2018
Nanomechanics Inc. 2018
Nano Indenter product line from Keysight Technologies 2018
Zeta Technologies Co. Ltd 2017
Luminescent Technologies, Inc. 2014
Ambios Technology, Inc. 2010
Microelectronic Inspection Equipment business unit of Vistec Semiconductor Systems, Inc. 2008
ICOS Vision Systems Corporation NV 2008
Therma-Wave Corporation 2007

Source: Author's own creation, Data Sources: Crunchbase.com, Wiki

Orbotech deal

Last year, in March, the company entered into a definitive agreement to purchase Israeli consumer electronics company called Orbotech (ORBK) for $38.86 in cash and 0.25 of a share of KLA-Tencor common stock in exchange for each ordinary share of Orbotech. Even though Orbotech is

This article was written by

David Krejca profile picture
Research analyst, individual investor. Queen Mary University of London alumnus. Successfully passed Level I of the CFA Program (June 2016). Seeking growth-at-a-reasonable-price (GARP), income and profitable growth opportunities regardless of geography, industry and market cap. Value, recent IPOs and high-growth companies. All articles are my opinions and do not constitute investment recommendations or advice.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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