Fool Portfolio Report
Monday, October 16, 1995

Following a pullback in the market this afternoon, the FOOL traded minor gains for minor losses and closed the day down .25%. Our portfolio exactly traced the S&P 500's return Monday, but couldn't keep up with a flattish NASDAQ.

The exciting event of the day was the earnings report for KLA Instruments, which came out in the early morning. KLA, you may recall, is on a June fiscal year, meaning this was the company's first-quarter report for fiscal '96. KLAC reported record first-quarter sales of $149,076,000 and record net income of $27,326,000. Those numbers compare with sales of $83,179,000 and net income of $12,898,000 for the first quarter last year. Quarterly earnings per share were $0.52 this year compared with $0.27 in the prior year, and that of course comes after the adjustment for the company's 2-for-1 split in September.

First Call's estimates for the quarter ran at 49 cents per share, meaning KLAC outdid estimates by 3 pennies.

(For those looking to find earnings estimates online, you can gain access directly from our main screen. Just select the item in the middle of our main-screen listbox entitled: "NEW!! SEARCH for Company Info!" You can find a wealth of Motley Fool and AOL financial tools, all located conveniently in the same spot in Fooldom every day. If you have suggestions or comments about our search tool, just drop a note in our Suggestion Box, which is also available in the main-screen listbox by scrolling down.)

You may be curious, as we often are, how these numbers compare with KLAC's previous quarter (i.e. June 1995). The answer is, extremely well. Sales were up 9% quarter over quarter, net income was up 14%, and earning per share rose 11%.

Further, NEW orders for the quarter exceeded $200 million, which is also an all-time record. These orders came in primarily for the company's bread-and-butter KLA 2100 systems, which allow semiconductor manufacturers to optimize the "yield," or number of chips created. KLA's sales were, as always, extremely well distributed geographically. KLAC sold slightly more than one-third of its systems in the U.S., with a stronger than normal share (well over 20%) in the Asia-Pacific market alone.

Margins were up too, and the company also paid down the last $20 million of its long-term debt (which was mortgage debt). KLAC now has $241 million in cash on its balance sheet, and NO long-term debt. That's highly Foolish.

The stock, as today's subheadline reveals, was down $1 1/2 on the bid. It didn't start out that way. KLAC opened up more than one point, at $41, presumably on the positive earnings news. And by mid-afternoon, KLA's stock remained above Friday's close, before the selloff in the last couple hours sunk these shares. It's hard to say why, and I personally don't spend a lot of time attempting to explain the reasons behind short-term movements. But the selloff may well have reflected nervousness about Intel's earnings report, which came out after market close (and as it turned out, also beat estimates by 3 cents). We're given to understand that IBM reports earnings before market open tomorrow, and Microsoft reports earnings later in the day, so the next 24 hours serves as a reliable bellwether on America's technology sector. Performance appears to be superb.

Sitting on a 14% loss, we remain unworried by KLAC's market-losing tally. We really do have tremendous faith in this company, its technology, and its niche. And the balance sheet is, as they say, to die for.

Little else was noteworthy, Monday. In a sea of half-point moves (or less), we do need to draw special attention to Ride Inc., which hit another closing Fool high of $21 1/4, now up 114% overall. The company reports earnings on Thursday, and is expected to show 27 cents per share.

I'll close today by bringing your attention to a new feature in Fooldom. Our main-screen listbox now has an entry entitled "The Motley Fool's Favorite Areas on AOL." There you'll find links to some of the best sites we've located on the service. If you're new to the service, or haven't explored much and would like to find some of what we consider AOL's best features, I encourage you to click in and check it out.

Stay Foolish.

David Gardner, October 16, 1995

Today's Moves

AMER - 3/4 AMAT --- CHV - 5/8 GE - 1/8 GPS - 1/2 IOMG + 1/8 KLAC -1 1/2 RIDE + 1/2 S + 1/8 SNIC + 1/4

Today's Numbers

Day Month Year History FOOL -0.25% -3.38% 47.00% 63.21% S&P 500 -0.25% -0.24% 26.95% 27.19% NASDAQ -0.02% -2.44% 35.40% 41.37% Rec'd # Security In At Now Change 8/5/94 340 AmOnline 14.55 64.50 343.43% 5/23/95 510 Ride Inc. 9.91 21.25 114.50% 5/17/95 335 Iomega Corp 15.11 20.00 32.33% 8/5/94 165 Sears 28.93 35.50 22.73% 4/20/95 155 The Gap 32.55 38.13 17.13% 8/11/95 95 GenElec 57.91 62.88 8.57% 8/11/95 110 Chevron 49.00 48.25 -1.53% 8/24/95 130 KLA Instrm 44.71 38.25 -14.45% 8/24/95 100 AppldMatl 57.52 47.50 -17.43% 12/23/94 340 SonicSol 14.48 10.00 -30.95% Rec'd # Security Cost Value Change 8/5/94 340 AmOnline 4945.56 21930.00 $16984.44 5/23/95 510 Ride Inc. 5052.44 10837.50 $5785.06 5/17/95 335 Iomega Corp 5063.13 6700.00 $1636.87 8/5/94 165 Sears 4772.65 5857.50 $1084.85 4/20/95 155 The Gap 5045.25 5909.38 $864.13 8/11/95 95 GenElec 5501.87 5973.13 $471.26 8/11/95 110 Chevron 5389.99 5307.50 -$82.49 8/24/95130 KLA Instrm 5812.49 4972.50 -$839.99 8/24/95 100 AppldMatl 5752.49 4750.00 -$1002.49 12/23/94 340 SonicSol 4924.18 3400.00 -$1524.18 CASH $5969.86 TOTAL $81607.36