Then you have the semiconductor stocks and the semi equipment stocks, which are totally annoying because there is nothing really good happening with Applied Materials (AMAT) and KLA Tencor (KLAC), but the buyers don't even seem to care. Maybe they are just buying an ETF or HOLDR. ("The Nazz Tells No Lies," 4-3-09)

I am happy to buy puts on an Applied Materials (AMAT), a KLA-Tencor (KLAC), a Novellus (NVLS) and the like. This group is endlessly hyped by Wall Street, and I am not buying it at all.

Market Perform/Underperform Bias - Price 22.77 on Nov. 3
by First Global

KLAC reported weak numbers for Q1FY09, due to ongoing macroeconomic uncertainty, capex reduction, declining demand and limited access to financing...management has provided a weak, guarded outlook, and expects new orders to be flat sequentially, followed by a decline of 19% to 23% sequentially in revenues, bringing an EPS range of 30 to 34 cents for Q2 [of fiscal-year] '09. ...KLAC could benefit significantly from its recent acquisitions in the long run [if well-executed, but] expect bookings, revenues and margins to decline near term. Market cap: $3.84 billion.

KLA-Tencor (KLAC) was downgraded from Buy to Neutral at Bank of America. $29 price target. Expect lower industry cap-ex spending, heading into 2009.

The San Jose-based maker of semiconductor equipment added 15 million shares to its buyback plan. The company expects the buyback to be completed within 15 months.

Word of the buyback, in combination with news that worldwide chip sales jumped 7.5% in May to $21.8 billion, forced KLAC shares to climb $1.26 to $40.97, or 3.2%.

In late April, KLA-Tencor reported disappointing 3rd quarter earnings with net income down 28% to $111 million or 61 cents a share, from $155 million or 76 cents a share in the year earlier period. Total sales sunk 16% to $602 million. During the quarter the company repurchased $180 million in common stock and paid out $27 million in dividends.

For the fourth quarter, the company expects orders to drop about 5% with revenue between $560 million and $580 million.

KLAC reported the three month average billings for May at $1.31 million, a 2% drop from the previous month, and down 21% from the same period last year.

Analysts from Wall Street Strategies acknowledge the unfavorable supply-demand conditions right now in the semiconductor business, but commented, "We believe the Company is well positioned to be one of the first to benefit from the soon to come upturn in demand from the semiconductor industry." The analysts have a buy rating on KLAC and a $47.50 price target.

The San Jose-based maker of semiconductor equipment added 15 million shares to its buyback plan. The company expects the buyback to be completed within 15 months.

Word of the buyback, in combination with news that worldwide chip sales jumped 7.5% in May to $21.8 billion, forced KLAC shares to climb $1.26 to $40.97, or 3.2%.

In late April, KLA-Tencor reported disappointing 3rd quarter earnings with net income down 28% to $111 million or 61 cents a share, from $155 million or 76 cents a share in the year earlier period. Total sales sunk 16% to $602 million. During the quarter the company repurchased $180 million in common stock and paid out $27 million in dividends.

For the fourth quarter, the company expects orders to drop about 5% with revenue between $560 million and $580 million.

KLAC reported the three month average billings for May at $1.31 million, a 2% drop from the previous month, and down 21% from the same period last year.

Analysts from Wall Street Strategies acknowledge the unfavorable supply-demand conditions right now in the semiconductor business, but commented, "We believe the Company is well positioned to be one of the first to benefit from the soon to come upturn in demand from the semiconductor industry." The analysts have a buy rating on KLAC and a $47.50 price target.

Sector Perform - Price 46.12 on June 3
by Pacific Crest

Shares are trading at 18.5 times consensus F2009 EPS estimate, a significant premium over the group average of 16.4 times; given concerns over margin disappointment, we see limited upside to the stock. While we expect KLC to maintain its dominance in the process-control segment, [where we see] compound annual growth of 12% through 2012 -- versus 8% for wafer-fab equipment in general -- we see virtually no upside to the stock. Market cap: $8.33 billion.

KLA-Tencor (KLAC) was upgraded from Hold to Buy, Citigroup said. $56 price target. Several catalysts are likely to develop against an improving cyclical backdrop.

KLA-Tencor (KLAC) was downgraded from Perform to Underperform, Oppenheimer said. $32 price target. Channel checks indicate a downward spiral in the company's reticle inspection business.

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