Lam Research (LRCX, NASDAQ): To the Insiders Message Board

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Technology Stocks : Lam Research (LRCX, NASDAQ): To the Insiders

LRCX 141.84

-4.7%

1:59 PM EST

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To: Jong Hyun Yoo who wrote (3718)	12/10/1999 2:10:00 AM
From: Jong Hyun Yoo	Read Replies (4) of 5867

CSFB had a following comments: 1)we are at the early stage of uptick in the capacity buys. Die shrinks no longer is the effective way of increasing capacity. Chipmakers will boost the capacity mainly by purchasing additional equipements. I find the above statement to be the essence of current upturn. Last downturn was, in my opinion, mainly caused by two factors: 1) indiscriminate spending to add capacity by some Asian country such as Korea to just obtain the market share. 2) Aggressive shrink of the die size. In 95-96, the feature size was reduced from something like 0.75 micron to 0.25 micron. This aggressive reduction of the die size coupled with indiscriminate increase in Fab construction (one new fab per each week) led to severe downturn when especially chip demand suffered from Asia financial crisis. 2) LRCX will evolve into the second largest North American supplier. CMP is catching on with copper. At least, four chip companies are considering TERES for copper damascene applications. We know that AMD and TSMC use TERES for copper process. Since AMD and Motorola have a very close relationship with the process developement, Motorola might be the other company. I suspect that Intel, Texas Instrument, as well as Samsung might be very interested parties.... 3)Current Q2 revenue estimate of 270 million might be too low. Sees upside surprise of AT LEAST 10 million. If the order momentum continues beyond March, revenue may grow faster than projected over the next several Q's. Lam had an EPS of 58 cents on 240 million revenue last Q. With current operational leverage, LAM could generate additional 7 cents per every 10 million incremental revenue. At 280 million, LRCX could see EPS as high as 86 cents per share. With improved operational efficiency especially in the area of manufacturing, EPS above 90 cents might be possible, full 20 cents higher than the consensus estimate. 4)LRCX manufacturing margins upside is keyed to further gain in productivity and lowered post-sale expenses. 5) Higher tax rate could retard the EPS growth rate on F01. Under a successful improvement in operational efficiency, Solid EPS growth possible in F01. 6) Raises the EPS estimate to $3.75 for F01 and $ 3.20 for F00 from $3.20 and $3.00 respectively. I definitely see upside potential by at least 20% from the new upwardly revised number. I believe you guys have found a great company with the right technology at the right time to invest in last year. Good luck to all.

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