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Technology Stocks : Lam Research (LRCX, NASDAQ): To the Insiders -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (2972)	6/21/1999 10:43:00 PM
From: Jong Hyun Yoo	Read Replies (3) \| Respond to of 5867

This upturn is very different from the last brief upturn we experienced two years ago. Last short-lived upturn was caused by unusual spending by Twainese foundaries and Korean fabs at the time when there was no driver for the chip capacity growth other than PC components. The market was already saturated and overexpansion by these two countries created tremendous pressure on the supply curve. The price for chips in the all segment of the industry plummeted and the rest is history... This upturn in the chip business is driven by growth in the consumer electronic appliance. The boom in the wireless business and new consumer electronic goods such as DVD player, Digital Camera, and Video Camera has been the main driver in this modest upturn for the semi and semi-equipment industry. In addition, the volume of the PC sold to people is also picking up even though pricing pressure is still there. The question you have raised was the duration of this upturn and hence determination of the correct timing for taking the profit in this sector. I maybe a bit more optimistic than others about this upturn. However, I do believe that this upturn is here and with us for a considerable duration. I say this because the growth of Internet will be a huge driver for demand for the chips in next three years. The wide spread of internet all over the world means more PCs, networking devices, and handheld devices that connects to the internet. And all these devices needs CHIPS.. In addition, consumer electronic appliances such as HDTV and video game players can facilitate additional growth for chip sector. Even though the upturn might be modest, I believe that the EPS for LAM can accelerate at a much faster pace. Lam's business was hit hard especially during last downturn because LAM's business had significantly more exposure to Taiwan and Korea than its competitors. With Korean economy stablizing and Taiwanese foundary business on fire, LAM can recuperate at more rapid pace. If you look at LAM in 95 fiscal year, it was generating EPS exceeding $3.10 a share based on roughly $800 million. LAM employee was about 2600 then... Then the management really lost control of the company as the company size more than doubled in 96-97. In fiscal year 97, LAM was losing money on the revenue exceeding $1 billion. Currently the management under Bagley's guidance has done a great job of turning around the company. He has resized the company to the 1995 level but he expects the revenue of about $1 billion in the next fiscal year. This translates into a huge operational leverage in EPS growth. Currently, every $10 million in extra revenue can translate into .10 to .15 cents IN EPS. you might call me crazy but I believe that with the growth in the etch and CMP market, LAM can achieve the revenue of $2 billion by year 2004-5 time frame. this will be EPS of roughly $10 a share... Long term vision is that I am actually expecting a split with this stock at the peak of this cycle. I am not saying that you should hold onto LAM till 2005. You should definitely take profit once it reaches your target price. All I am saying here is that LAM has a huge potential upside and I guess I will be needing some time to see whether I am correct or not.