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(typed very fast)

Net Inc. $47 million
Revenue $373 million
EPS $.23

First Call pegged eps at an average of $.20 (.18 to .23). So, they hit the high end of the range.

Forecast 1st qtr eps of $.25 to $.26 on rev of $370 to $380 million (the trend is up). It sees strong growth in 2003 and 2004.

Mask cost will be approaching $1 million per set. This is a positive for KLAC. Defect detection tools will be highly needed for copper at below 100 nanometer sizes.

The cross over to 300 mm tools will be in 2003. KLAC has the tools and is the only credible supplier in some areas.

Sept. Qtr will have flat bookings . Limited visibility in December qtr (conservatism with spot light on corporate accounting).

Market share : 2000 in 45% increased to 52% 2001

Book to bill greater than 1 (very good sign). KLAC tends to be a leading indicator of major chip maker's health.

Bookings are for high end equipment (turning away excess business).

GM 50.3% for the year.

$1.33 bil cash

DSO down to 69 days from 77 days.

back log $600+ million, no push outs

Wafer fab business up 25 to 30% up next year

GM slightly up next year, that will add an additional $.01 to EPS.

8 - 9 300 mm fabs in the world which is 55% of our business [high end business], 200 mm copper low k is the other half of the business.

Cutting costs by out sourcing: KLAC out sources 80% of sub assembly and out sourcing warehousing. In financing looking for lower costs sources.

.13 micron makers up to speed. Plenty of business in the inspection business.

Small cancellations, $12 mil total, all under $2 million orders.

Seasonalilty: September quarter is the lowest quarter. December tends to pick up.

Market share is watched closely [not disclosed]. There are many areas which could see improvement.

2 types of deferral:
Def Rev. ship products.
Unearned Rev is related to work to be completed.

Total is about the same as last year [by chance].

ASPs are going up because of 300 mm equipment. The jobs are more difficult which increases ASP. On average ASPs are moving up every quarter.

New Fabs, Pilot lines and so forth. Our orders are a combination of all of those. The overall mix is about the same. The push out of new fabs effects us the most.

Tools scale directly with capacity. When business picks up tools will pickup. But, service revenue doesn't scale directly. We believe that the increase in materials (6 up to 16 materials) to build chips will increase our business and market share because we have the best solutions. Software tools will increase also.

Book to ship is over 1:1 and book to bill is over 1:1. We pick flat order forecast because of conservatism. December qtr is hazy.

CD [critical dimension], we have greater that 10% of markets share. With the 24 installs we are in a good position.

There are no customers not at capacity constraints at 130 nano meters [the high end is doing well which bodes well of KLAC].

(The CC was up beat and a lot neat of technical points).


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