Defensive is a word you have to use with some caution when talking
about semiconductor equipment companies, but it is a word that has been
applied to KLA-Tencor (NASDAQ:KLAC)
in the past and with some reason. KLA-Tencor has historically been at,
or near, the top of the industry list in terms of operating margins and
the company has long held strong market share in its core inspection and
metrology markets.
How much is defensive really worth, though? KLA-Tencor has outperformed Applied Materials (NASDAQ:AMAT) over the last five and ten years, but has lagged ASML (NASDAQ:ASML) and Lam Research
(LCRX) and the comparisons get less favorable to KLAC at three years
and one year. What's more, the company is acting a little strangely for a
leader, seemingly backing away from actinic inspection and e-beam and
potentially opening a door for rivals, and cutting staff going into a
period that should see orders growing again.
If I thought
KLA-Tencor were significantly undervalued I might be inclined to think
of this as noise and opt to focus on the opportunities that should lie
ahead at 10nm as Intel (NASDAQ:INTC) and TSMC (NYSE:TSM)
look to ramp up spending. As it is, though, I have some concerns about
KLA-Tencor's operating plan and the shares aren't cheap enough for me to
ignore them.
Continue here:
Can KLAC Get Its Mojo Back?
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