KLA-Tencor sees lower revenue as economy weighs

SAN FRANCISCO Thu Jul 26, 2012 6:39pm EDT

SAN FRANCISCO (Reuters) - KLA-Tencor Corp (KLAC.O) forecast weaker-than-expected revenue for the current quarter as memory chipmakers and foundries concerned about the global economy hold off on new investments in semiconductor manufacturing gear.

Chip gear-makers, including KLA-Tencor and ASML Holding NV (ASML.AS) have benefited from booming smartphone and tablet sales, but worries about future demand have weighed on some of their customers, with PC sales barely growing.

"The industry demand outlook for the rest of calendar year 2012 has backed off recently due to a combination of weaker memory forecasts and some softening in near-term foundry demand," Chief Executive Rick Wallace told analysts on a conference call.

Foundries, or contract chip manufacturers, have been investing to ramp up capacity to make latest-generation 28 nanometer chips, currently in high demand. But they also have to forecast how the economy will affect future demand.

"You have marginal spending starting to go away, but you still have some fairly consistent spending at the leading edge, in particular as you have foundries ramping up capacity to 28 nm," said Weston Twigg, an analyst at Pacific Crest. "Visibility has really shrunk."

Leading foundry TSMC (5425.TWO) underestimated demand for 28 nm chips from its key customer Qualcomm Inc (QCOM.O) and smaller foundries have been rushing to roll out their own 28 nm production.

Adding new cutting-edge chip manufacturing capacity can take months or even years because of the complexity of the technology used.

SLOWER SALES

Milpitas, California-based KLA-Tencor Corp posted fiscal fourth-quarter revenue of $892 million, unchanged from the year-ago quarter.

Wallace said revenue in the current quarter would be between $700 million and $760 million.

Analysts were expecting fourth-quarter revenue of $874 million and $828 million for the current quarter, according to Thomson Reuters I/B/E/S.

Wallace also said new bookings in the current quarter would be $625 million to $775 million and that non-GAAP earnings-per-share were expected in the range of 75 cents to 95 cents.

KLA-Tencor said quarterly net income totaled $248 million, or $1.46 a share, up from $245 million, or $1.43 a share, in the year-ago quarter.

Non-GAAP earnings per share were $1.49.

The company's shares fell 3.3 percent in extended trading after closing 1.47 percent higher at $49.66 on Nasdaq.

(Reporting by Noel Randewich; editing by Gary Crosse and Andre Grenon)

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