The Zacks Analyst Blog Highlights: KLA-TENCOR, Intel, ASML Holding, L-3 Communications Holdings and Engility Holdings

Zacks


For Immediate Release

Chicago, IL – July 26, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include KLA-TENCOR Corporation (KLAC), Intel Corp (INTC), ASML Holding (ASML), L-3 Communications Holdings Inc. (LLL) and Engility Holdings, Inc. (EGL).

 

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Here are highlights from Wednesday’s Analyst Blog:

 

KLA Upgrades Surfscan

KLA-TENCOR Corporation (KLAC), an original equipment manufacturer (:OEM) of process diagnostics and control (:PDC) equipment, recently launched its first 450mm process control equipment. The Surfscan SP3 System as it is called is a tool for inspecting the wafer surface with the ability to detect surface quality after deposition and/or etching and create maps of the surface that could facilitate correction.

 

The drive toward 450mm wafers is increasing, with Intel Corp (INTC) putting $4 billion into ASML Holding (ASML) for the research and development of 450mm technology. The transition of larger wafer sizes is a big positive for the chip industry, since it enables significant cost reduction, thereby facilitating the move toward the mobile and emerging markets.

 

Surfscan SP3 450 is the upgraded version of Surfscan SP2/SP2XP. The latest version has thrice the data processing capacity and better sensitivity, as well as higher resolution.

 

All these qualities make it ideal for manufacturers to deliver superior quality wafers to meet the chip manufacturer’s strict guidelines. The inspection equipment can be used at the chip level, or substrate level.

 

To survive the cutthroat competition in the semiconductor industry, companies are scrambling to come out with sleeker and smarter devices at lower cost. Chipmakers are therefore under great pressure to provide increasingly complex devices at lower costs. This is playing into KLA’s sweet spot, because its equipment is used to increase the efficiency of the manufacturing process.

 

In the third quarter of 2012 and in fiscal 2011, KLAC earned 56.0% and 64.0% of revenue respectively from the defect inspection segment alone. As may be expected, the segment is more insulated from ups and downs in the market, because of the increased efficiency.

 

As per U.S. research firm Gartner, the semiconductor industry is expected to generate $312.0 billion in 2012. IHS iSuppli is even more optimistic, estimating total revenue of $324.6 billion this year.

 

KLA reported revenue of $840.5 million in the third quarter of 2012, which was up 30.8% sequentially, 0.8% year over year, better than the guided range of $770-830 million and well ahead of the consensus estimate of $802.0 million.

 

Currently, KLA-TENCOR Corporation has a Zacks Rank of #3, implying a short-term Hold recommendation.



L-3 Gets $1.98B U.S. Army Contract

L-3 Communications Holdings Inc. (LLL) has received a five-year contract worth $1.98 billion for rotary-wing aircraft maintenance and logistics support at Fort Rucker, Alabama from the U.S. Army Contracting Command on behalf of U.S. Army Aviation and Missile Life Cycle Management Command (:AMCOM). The contract has a one-year base period and four one-year options.

A rotorcraft or rotary wing aircraft is a heavier-than-air flying machine that uses lift generated by wings, called rotor blades that revolve around a mast. Rotorcraft generally includes those aircraft where one or more rotors are required to provide lift throughout the entire flight, such as helicopters, cyclocopters, autogyros, and gyrodynes.

Per the contract, the company will be responsible for providing maintenance, logistics and other related sustainment support services for more than 600 helicopters used by the U.S. Army Aviation Center of Excellence and the U.S. Air Force Air Education Training Command.

Based in New York City, L-3 is a prime contractor in Command, Control, Communications, Intelligence, Surveillance and Reconnaissance systems, aircraft modernization and maintenance, and national security solutions. L-3 is also a leading provider of a broad range of electronic systems used on military and commercial platforms. Over the longer run, we view the company as one of the best-positioned pure defense players based on its non-platform focus, broad diversification of programs and its focus on shareholder value.

Recently, L-3 Communications completed the spin-off of 100% of a new, independent, publicly traded government services company – Engility Holdings, Inc. (EGL) – to L-3 shareholders. We believe that L-3 Communications has ample opportunity for growth and profit expansion after the favorable conclusion to the spin-off of its Government Services businesses. The spin-off will remove a lot of uncertainty with respect to revenue and will also take away some of the lowest margins at the company.

 

 

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