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Achieving Success by Pairing Cost Control with Product Development
At face value, you couldn’t assemble a list of companies with more diverse business operations than the likes of KLA-Tencor, United Natural Foods, Coach, and MGM Mirage. But now, these companies share at least one common—and noteworthy— attribute: Each has earned a spot on Forbes Magazine’s list of the “26 Best Managed Companies in America.” In addition, KLA-Tencor is the only company in the semiconductor industry to receive the accolade for 2004.
Forbes developed this list by looking to its databases for the 1,000 publicly traded companies across 26 industries with at least $1 billion in sales. From here, the magazine narrowed its selection based on criteria such as sales and earnings growth, leverage, and total return. To validate its selections, the magazine also tapped into Audit Integrity, a Los Angeles- and New York-based financial analytics firm, for an overall score for each company based on accounting and governmental analysis, as well as a ranking in the categories of Accounting and Governance, Financial Condition, and Earnings Quality.
In its article about KLA-Tencor, Forbes described the financial hurdles faced by the semiconductor industry in recent years. “The last few years have been tough for anybody in the semiconductor business and doubly so for companies that sell chip-manufacturing equipment,” the magazine notes, pointing out that fewer new fabs mean fewer sales opportunities. However, KLA-Tencor, the magazine notes, “has recovered nicely by keeping a tight grip on costs while introducing one new product a month.” KLA-Tencor’s inclusion on the “Best Managed Companies” list also means that the company is part of the Forbes Platinum 400—the Best Big Companies in America. 44
Winter 2005
Yield Management Solutions
By the close of 2004, KLA-Tencor earned $243.7 million in net income, a 77.6 percent increase over the previous year.