(RTTNews) - Semiconductor equipment maker KLA-Tencor Corp. (KLAC: News ) said Thursday after the markets closed that its first quarter profit increased slightly from last year, helped by a sharp increase in demand from foundry customers, a one-time non-operating gain and a lower than normal tax rate. With this, the company has returned to black after three consecutive quarters of losses. The company's quarterly earnings per share, excluding items, also handily beat analysts' estimate.

The Milpitas, California-based company reported GAAP net income for the first quarter of $20.4 million or $0.12 per share, compared to $19.3 million or $0.11 per share for the year-ago quarter.

Excluding items, non-GAAP net income for the first quarter was $26.2 million or $0.15 per share, compared to $55.4 million or $0.32 per share in the prior year quarter.

On average, 13 analysts polled by Thomson Reuters expected the company to earn $0.02 per share for the first quarter. Analysts' estimates typically exclude special items.

Total revenue for the first quarter fell 36% to $342.69 million from $532.51 million in the same quarter last year. Twelve analysts had a consensus revenue estimate of $332.32 million for the first quarter.

Product revenue for the quarter dropped to $229.3 million from $405.5 million a year ago, while service revenue declined to $123.4 million from $127.0 million last year.

"KLA-Tencor delivered stronger-than-expected results and returned to profitability in the first quarter of fiscal 2010, led by a sharp increase in demand from foundry customers," said Rick Wallace, President and Chief Executive Officer of KLA-Tencor.
Semiconductor gear makers had been in red due to a difficult semiconductor industry environment. During the recession, demand for manufactured electronic items continues to fall off coercing chipmakers to live through sinking sales. However, recent results have shown a marked improvement in new orders, signaling that the market may have bottomed out.

Last week, Lam Research Corp. (LRCX) reported higher first quarter profit, as lower expenses and improved gross margin helped offset decline in revenues.

Also last week, Novellus Systems, Inc. (NVLS) reported a loss for the third quarter, compared to a profit last year, reflecting a significant decline in sales.

Applied Materials, Inc. (AMAT) is the world's biggest semiconductor equipment maker.

KLA-Tencor shares, which have traded in a range of $14.81 to $37.71 over the past year, closed Thursday's regular trading session at $34.28, up $1.03 or 3.10% and gained an additional 23 cents in after hours trading.

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by RTT Staff Writer

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