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KLA-Tencor Sees YoY Fall in Product Revenues in 1Q16

Key Highlights of KLA-Tencor’s 1Q16 Results

(Continued from Prior Part)

Product and service revenues

KLA-Tencor’s (KLAC) product revenues fell by ~3.3% YoY, or year-over-year, from $476 million in 1Q15 to $460 million in 1Q16. Service revenues, on the other hand, rose ~9.4% YoY, from $166 million in 1Q15 to $182 million in 1Q16. As mentioned in the first part of our series, total revenues remained constant at $642 million.

Spend on engineering, research and development

In 1Q16, KLA-Tencor spent $120 million on engineering as well as research and development compared to $143 million in 1Q15, a fall of 16.5% YoY. Also, selling, general, and administrative expenses fell by ~9.8% in the same period, from $101 million in 1Q15 to ~$91.7 million in 1Q16. Interest expense rose by 126%, from $13 million in 1Q15 to ~$30.6 million in 1Q16. This is driven by a rise in long-term debt YoY from $748 million in 1Q15 to $3 billion in 1Q16. The cost of revenues fell by 6.3% YoY, from ~$288.5 million in 1Q15 to $270 million in 1Q16.

Net income rose by ~45.2% YoY, from $72 million in 1Q15 to $104 million in 1Q16. This was due to lower spending on research and development, as well as lower selling, general, and administrative expenses, potentially indicating operational efficiency.

Lam Research’s (LRCX) shares rose by ~1.1% on October 21, 2015. In comparison, KLA-Tencor’s shares rose by ~18.8%, and Applied Materials’ (AMAT) shares fell by -0.77%. KLA-Tencor shares rose on news of a potential acquisition by Lam Research. We’ll discuss this further in the fifth part of our series.

KLA-Tencor constitutes ~2.4% of the iShares PHLX Semiconductor ETF (SOXX) and 0.84% of the Market Vectors Semiconductor ETF (SMH).

Continue to Next Part

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