KLA-Tencor Earnings: Shrinking Margins, Net Income Falls

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S&P 500 (NYSE:SPY) component KLA – Tencor Corporation (NASDAQ:KLAC) reported its results for the first quarter. KLA-Tencor is a company that designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries. Its primary offerings include wafer and integrated circuit defect monitoring.

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KLA – Tencor Corporation Earnings Cheat Sheet

Results: Net income for KLA – Tencor Corporation fell to $135.4 million (80 cents per share) vs. $192 million ($1.13 per share) a year earlier. This is a decline of 29.5% from the year-earlier quarter.

Revenue: Fell 9.5% to $720.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: KLA – Tencor Corporation fell short of the mean analyst estimate of 87 cents per share. It fell short of the average revenue estimate of $873.2 million.

Quoting Management: “KLA-Tencor’s results for the first quarter of fiscal year 2013 reflect today’s challenging demand environment for the wafer fab equipment industry,” said Rick Wallace, president and CEO. “Though macro-economic uncertainty has caused our customers to delay expansion plans, they continue to invest in leading-edge process control technologies to improve device performance and lower costs. KLA-Tencor remains focused on customer collaboration and making investments to extend our technology leadership to drive long-term growth.”

Key Stats:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 1.3 percentage points from the year-earlier quarter to 56%. Over that time, margins have contracted on average 2.1 percentage points per quarter on a year-over-year basis.

The company fell short of forecasts after beating estimates in the previous two quarters. In the fourth quarter of the last fiscal year, it topped the mark by 17 cents, and in the third quarter of the last fiscal year, it was ahead by 18 cents.

Net income has dropped 9.2% year-over-year on average across the last five quarters. Performance was hurt by a 40.3% decline in the second quarter of the last fiscal year from the year-earlier quarter.

Over the last five quarters, revenue has fallen an average of 1.6% year-over-year. The biggest drop came in the second quarter of the last fiscal year, when revenue fell 16.2% from the year-earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from $1.04 a share to 93 cents over the last ninety days. At $3.98 per share, the average estimate for the fiscal year has fallen from $4.46 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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