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Technology Stocks : Semi Equipment Analysis

SOXX 299.81

+2.7%

Dec 19 4:00 PM EST

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To: Donald Wennerstrom who wrote (39737)	7/30/2008 12:12:06 PM
From: Donald Wennerstrom	Read Replies (1) of 95617

Below are "snips" of information from the Credit Suisse assessment of the LRCX quarterly report of yesterday. <<Lam Research Corp. (LRCX) 29 July 2008 At trough, with unclear duration Bottomline. As we noted in our quarterly preview, the cycle has become incrementally worse in the last month (SNDK capex cut, Rexchip push out to 2H09). No catalysts to own SCE given estimate risk and little confidence on any recovery thesis. We hold out hope for LRCX as company has been spending ~$30mm/qtr in extra opex for non-SEZ cleans for three years – by year end we expect either a pare back or delivering on revenues. LRCX report concerning for KLAC's estimates - remain cautious on KLAC. LRCX Valuation. LRCX troughed at ~1x EV/sales in CY02 – our new CY09 revs of ~$2.1bb pegs downside to ~$27. We are revising our CY09 EPS to $2.41 – our new PT of $38 represents 16x CY09 EPS. Our estimates assume ~5% capex growth in CY09, and LRCX either delivering on clean or paring back on expenses in CY09. Outlook for KLAC. SCE system shipments for VSEA, LRCX, AMAT, TEL all appear to be declining by two-thirds from peak to trough quarter. Even assuming just a 50% decline for KLAC – we’d think trough revenues for KLAC need to be ~$475mm (or less), versus street consensus at ~$560mm for trough revenues for KLAC in C3Q08 (Sep). Estimates are at least 20% too high for KLAC in 2009, continue to be cautious until numbers more realistic and product momentum stabilizes.>>

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