S&P affirms Lam Research Corp ratings
( PRESS RELEASE PROVIDED BY STANDARD & POOR'S )
NEW YORK, Aug. 3 - Standard & Poor's today affirmed its double-'B'-minus corporate credit and bank loan ratings on Lam Research Corp. Standard & Poor's also affirmed its single-'B' subordinated debt rating on the company.
The outlook is negative.
The ratings on Lam Research reflect the company's good position in certain niche semiconductor processing markets and good liquidity.
These factors are offset by aggressive competitive conditions. Although semiconductor capital goods sector revenues remain well below historical peaks, there are indications of recovery as its served market emerges from a three-year recession.
Fremont, Calif.-based Lam Research manufactures equipment to deposit, etch, and polish microscopically thin layers on the surface of silicon wafers, as part of the semiconductor manufacturing process.
As the fifth-largest company in its industry, Lam Research's ability to sustain its position is materially less than industry leaders.
Lam Reserach's revenues for the fiscal year ending June 1999 were 40% below the prior two years' levels. Still, chip manufacturers are selectively investing in equipment, which can enable them to make technological improvements.
Certain chip companies are expanding, even though total industry capacity is adequate. Lam Research's revenues grew 38% in the June 1999 quarter from the March 1999 level, while its book-to-bill ratio at June 30, 1999, was 1.2:1, indicative of continued revenue growth in coming quarters.
Lam Research's refreshed product line has also received good reviews, potentially contributing to revenues as well. Product gross margins remain good, in the upper 40% area.
Lam Research took restructuring charges in February, June, and November 1998, helping the company to trim administrative expenses by $50 million in fiscal 1999.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $22 million in the June 1999 quarter, compared to $7 million in the March 1999 quarter and zero for the first two quarters of the year 1999.
Lam Research's unrestricted cash, $312 million at June 30, 1999, supplemented by full availability in the revolving credit agreement, should provide sufficient funds to support product development and working capital requirements over the next several quarters.
OUTLOOK NEGATIVE
Portions of the served semiconductor market still retain excess capacity, while equipment orders can still be deferred without penalty.
Still, Lam Research's revenues have increased in the last two quarters while the company has returned to profitability after an extended period of losses.
If the recent revenue and earnings improvement can be sustained, the outlook could be revised to stable in the next few quarters, Standard & Poor's said.
biz.yahoo.com |
