A strong Q2 for KLA-Tencor
Milpitas-based process control and yield management company KLA-Tencor has announced operating results for Q2 fiscal 2016, which ended on December 31, 2015. It reported GAAP net income of $152 million and GAAP earnings per diluted share of $0.98 on revenues of $710 million.
Results were above the guided range for bookings and non-GAAP earnings per share, and shipments and revenue finished at the top end of the range of guidance.
A key highlight in the quarter was the news in October that KLA-Tencor and Lam Research have entered into a merger agreement, subject to regulatory and stockholder approval. Lam, based in Fremont, California, sells semiconductor deposition, etch, and clean solutions.
New orders grew 26 percent sequentially to $910 million for the third highest quarterly gross bookings result in the company's history. The company shipped its first evaluation unit of the new GEN 5 broadband plasma optical inspection platform in the December quarter, but the Q2 order results did not include any GEN 5 bookings. The company expects to begin taking initial orders for GEN 5 in the current quarter, and ship multiple GEN 5 units in the first half of calendar 2016.
Orders from Memory customers were 48 percent of new systems orders in December, and up strongly on a sequential basis both in terms of percentage of total orders, and absolute dollars compared with the September quarter, with the majority of the demand focused on DRAM investment.
Foundry customers contributed 36 percent of new systems orders in Q2. The Foundry bookings profile in the December quarter featured strong demand across our product portfolio to support leading edge development as customers prepare to ramp 10nm capacity in the second half of calendar 2016, consistent with our expectations for the timing of the 10-nanometer ramp. In addition, demand for 28nm capacity fill-in projects continues to be robust, as Chinese customers invest in capacity to support local market demand.
Logic was 16 percent of new systems orders in December, and up sequentially from the September quarter.
In terms of the distribution of orders by product group, Wafer Inspection was approximately 53 percent of new systems orders in Q2. Orders from the Patterning Group, which includes our mask inspection business, were approximately 24 percent of orders in December. The Service business contributed 20 percent of total bookings in the quarter, and non-Semi was approximately 3 percent.
Outlook
Looking ahead to the March quarter, KLA-Tencor expects another quarter of solid demand. Shipments are expected to be in the range of $720 million to $800 million, revenue is expected to be in the range of $690 million to $750 million, with non-GAAP earnings per diluted share in the range of $0.86 per share to $1.06 per share. GAAP earnings per diluted share is expected to be in the range of $0.83 per share to $1.01 per share.
Over the next several quarters, KLA-Tencor says it expects continued order momentum and high levels of business activity, highlighted by strong customer acceptance of new products. It is expecting solid sequential growth in revenue and earnings in the first half of calendar 2016 compared with the second half of calendar 2015.
