Chip Support Companies Fall Short of Hopes

Two semiconductor equipment makers, KLA Tencor Corp. and Novellus Systems Inc., reported on-target quarterly earnings Tuesday, but investors had been hoping for upside surprises and their shares both tumbled as a result.

KLA Tencor, based in San Jose, reported second-quarter net income of $10 million, or 11 cents a share, excluding restructuring and acquisition charges, versus $52 million in net income and 59 cents a share a year ago.

According to First Call, which tracks Wall Street estimates, the consensus among analysts was for 9 cents a share, before any restructuring or acquisition charges.

Revenue in the quarter fell to $193 million, from $326 million a year ago, as KLA, along with other chip equipment makers, still were affected by the slow pace of investment in new facilities by their chip making customers.

The December quarter also included a restructuring that consolidated certain company facilities and work force cuts. KLA took a $35-million charge in the quarter, and including the charge, had a net loss of $18 million, or 20 cents a share.

“People were looking for the revenue guidance to be up, for the March quarter, and they basically said they are keeping it flat,” said Mike O’Brien, a SoundView Financial Group analyst, referring to the company’s comments on its conference call.

KLA’s shares closed down $3.91 to close at $54.63 on Nasdaq.

O’Brien said he believes KLA management is being conservative in its view of the March quarter and he is looking for revenue to grow in the high single-digits next quarter.

Novellus, also based in San Jose, reported fourth-quarter net income of $8.1 million, or 23 cents a diluted share, down from $22.4 million in net income, or 64 cents a diluted share, a year ago.

According to First Call, analysts had expected Novellus to earn 23 cents a share.