KLA-Tencor tops 3Q estimates

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KLA-Tencor (Nasdaq: KLAC) reported earnings of 38 cents a share for its third quarter Thursday, topping First Call consensus estimates by a nickel.

Shares closed at 78 Wednesday, having risen lately on a bullish outlook for semiconductor equipment stocks. KLA-Tencor and its competitors made decent gains April 11 after Morgan Stanley Dean Witter raised its 12-month price targets on a handful of semiconductor-equipment leaders.

KLA-Tencor was raised from $90 a share to $105 a share. Applied Materials Inc. (Nasdaq: AMAT) led the charge with strong gains after its target price was hoisted from $105 to $120 a share. Lam Research Corp. (Nasdaq: LRCX) and Teradyne Inc. (NYSE: TER) also posted gains.

On April 12, Salomon Smith Barney also initiated coverage on the stock with a "buy" rating.

In KLA-Tencor's third quarter, revenue was $413 million, up 96 percent from the $211 million reported in the year-ago quarter. Net income improved over three-fold to $73 million, or 38 cents a share, compared to $21 million, or 11 cents a share, in the same period one year ago.

The company said its record bookings during the quarter and increased backlog came from particularly strong orders from Taiwan and the Asia Pacific region.

KLA-Tencor also touted the records from demand for its seven product lines; the most significant quarter to quarter growth occurred in E-Beam wafer inspection, thin film measurement, and Automated Macro inspection products, the company said.

Gross margins increased to 56 percent during the March quarter from 54 percent in the December quarter. Cash and investments increased $34 million during the quarter to $888 million.

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