KLA-Tencor Earnings Call Nuggets: Segment Concentration and Memory Aspects

KLA-Tencor Corporation (NASDAQ:KLAC) recently reported its third quarter earnings and discussed the following topics in its earnings conference call.

Segment Concentration

Satya Kumar – Credit Suisse: I guess I was wondering – there is a fair bit of disconnect between what you gave regarding for the year and what we saw from one of your peers yesterday and also what you’re looking into June. Is this a segment concentration type situation that’s going on or are there any market share changes that’s happening – that’s affecting your outlook?

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Rick Wallace – President and CEO: Yeah Satya, it’s Rick. I don’t see any particular segment difference. I think that was just about our perspective on the year. When we look out and talk to customers, we do see some improvement in the second half, but still we see, as we said, a little bit trending down based on all the factors we cited. I think that if you go case-by-case, I think you’ve got memory is a technology but not a lot of investment for capacity. I think foundry continues to be relatively strong and we’ll see logic probably continuing, although probably cooling off a little bit in the second half. That’s how we roll up to the annual. As far as share, our share continues to be very strong. I think that we see, from overall perspective, some opportunity actually to gain share this calendar year. We’ve got some really strong product positions and making pretty good investments in close collaboration with our customers. So, we don’t see share overall for KLA-Tencor to be – obviously we have to work for it, but we’re not modeling any share loss through this year. As we talked about last year, we actually did quite well in share 2012.

Memory Aspects

Timothy Arcuri – Cowen & Co.: I just wanted to dive into that a little more, because there’s just such a difference between what you’re saying and what others are seeing. Rick, do you think that there’s been any change in your view that process diagnostic is still 15% of wafer fab? Can you maybe discuss what could push that up from here and what might be pushing that down if only in the short-term?

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Rick Wallace – President and CEO: Sure Tim, I think that the – I guess overall, we model memory to be improving in terms of adoption or process control, but not at the level of what we see for foundry and logic. So, the degree there is a mix change in the near term that would mean that process control overall would probably not see as much appreciation as somebody that was more exposed to memory. However, for the overall, for the year, we think that foundry continues to invest, although the build out of 20 nanometers is – largely people are making those investments, but we think that will possibly be light participation with more customers gearing up for the transition to below 20 nanometer whether its 16 nanometer or 14 nanometer depending on who. So yes, there is a bit of a mix in the near-term scenario but long-term overall capital intensity for foundries I think probably we are modeling it pretty consistent with others. I think that process control for foundries continues to be very strong.

A Closer Look: KLA-Tencor Earnings Cheat Sheet>>