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13 January 2009


KLA-Tencor cuts December-quarter guidance

Reflecting further deterioration of conditions in the semiconductor and related industries, process control and yield management solutions provider KLA-Tencor Corp of Milpitas, CA, USA has revised its financial outlook for its fiscal second-quarter 2009 (to end-December 2008). KLA-Tencor now expects revenue of $390-400m (down about 26% on last quarter’s $533m). Analysts had been expecting revenue of about $415m. KLA-Tencor also expects bookings of $235-245m.

“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 for KLA-Tencor, with weak services revenue a key contributing factor to that result,” says president & CEO Rick Wallace.  “We cannot predict the severity or duration of this economic downturn.  In light of these conditions, we recently announced actions we are taking that are intended to optimize our cost structure and lower our break-even level [lowering the quarterly operating expense run rate to $165-170m], while maintaining our strategic focus and strong financial position,” he adds. In mid-November, KLA-Tencor announced a 15% cut in its workforce by the end of June. “We will continue to evaluate further cost savings as conditions merit.” 

KLA-Tencor is in the process of conducting its annual evaluation of the value of its goodwill and intangible assets for potential impairment. Based on the result to date, it currently expects to incur a material non-cash impairment charge in fiscal second-quarter 2009. The firm is unable to provide an estimate of its earnings per share until the completion of the ongoing evaluation, but expects that it will report a loss from operations, even before taking into account the impairment charge.

KLA-Tencor expects that the loss, in addition to being impacted by lower revenues, will reflect: (i) the material non-cash charge mentioned above; (ii) an increase in inventory reserves, driven by declines in the firm’s product build plans and service inventory usage; and (iii) an increase in reserves for potential losses relating to heightened risk of non-payment of accounts receivable as certain customers face financial difficulty. The actual amounts of such impairment charge and reserve increases will be given when KLA-Tencor reports its fiscal second-quarter 2009 results on 29 January.

See related items:

KLA-Tencor to cut global workforce by 15%

KLA-Tencor president and COO Kispert plans exit

Search: KLA-Tencor


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