Shares of KLA dropped Friday after the semiconductor equipment supplier offered up a current-quarter outlook that fell short of Wall Street views. KLAC stock plunged nearly 8% just after the opening bell.
The drop came even though the Milpitas, Calif.-based company beat fiscal second-quarter estimates by earning an adjusted $7.38 a share on sales of $2.98 billion in the period ended Dec. 31. Analysts polled by FactSet had predicted earnings of $7.10 a share on sales of $2.82 billion. In the year-earlier period, KLA earned $5.59 a share on sales of $2.35 billion.
For the current quarter, KLA predicted adjusted earnings of $5.22 a share on sales of $2.35 billion. That's based on the midpoint of its outlook. However, analysts were looking for earnings of $5.90 a share on sales of $2.53 billion in the March quarter.
"The December quarter marked another strong period of growth and profitability, as we navigated through marketplace volatility and supply chain challenges," Chief Executive Rick Wallace said in a news release late Thursday.
KLAC Stock Sinks
He added, "As the semiconductor industry manages capacity adjustments in calendar 2023 following three years of substantial growth, KLA is well positioned to maintain our technology leadership through continued investment in next generation products that help enable our customers' technology roadmaps."
In morning trades on the stock market today, KLAC stock sank 7.8% to 395.42. During the regular session Thursday, KLAC stock increased 1.5% to close at 428.76.
Lam Chops Workforce As Sales Slow
Other semiconductor equipment stocks moving on earnings news included Lam Research and Teradyne.
Late Wednesday, Lam beat Wall Street's sales and earnings estimates for the December quarter, but guided well below views for the March quarter.
Lam said its customers, especially memory-chip makers, are being cautious with spending. In response, Lam announced plans to cut 1,300 jobs, or about 7% of its workforce.
"Given the decline in wafer fabrication equipment spending expected in calendar year 2023, we are taking proactive steps to lower our cost structure and drive efficiencies across our global footprint, while preserving critical R&D," Chief Executive Tim Archer said in a news release.
Lam dropped 1.9% to 488.10 in Friday morning trades.
Teradyne Sees Lower Demand Ahead
Meanwhile, Teradyne also topped December-quarter targets and disappointed with its current-quarter guidance. Teradyne's sales and earnings have fallen on a year-over-year basis for four straight quarters.
"We expect a step down in demand in our semiconductor and storage test markets, which will persist at least through the first half of the year," Teradyne President Greg Smith said in a news release late Wednesday.
He added, "This near-term slowdown is consistent with past industry cycles and we believe the long-term drivers of test demand remain firmly in place supported by expanding applications for complex semiconductor devices in compute, mobility, automotive and across the global economy."
Teradyne stock sank 3.2% to 100.39 Friday morning.
KLAC Stock On IBD Stock List
The IBD Tech Leaders stock list includes 12 semiconductor equipment companies. Among them are KLA, Lam Research and Teradyne.
KLAC stock has a best-possible IBD Composite Rating of 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
