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

To: Kirk © who wrote (3710)	12/7/1999 11:09:00 PM
From: Jong Hyun Yoo	Read Replies (2) \| Respond to of 5867

Kirk, The current business environment for LRCX is extremely robust. Booking situation in the Asia for LRCX looks excellent especially in Taiwan and Japan. The stock should move higher in the near term given that the January and March earning outlook is very rosy. Beyond the March Q, I am not sure how the booking trend will change. If we see a little leveling-off with the booking growth rate, the stock could correct. However, one should use any pull-back to establish more position. Even at this price, I continue to believe that LRCX is the best valued company among large semi-equipment companies including AMAT, KLAC, NVLS, and ASML. 1) The current strength in the equipment business is in Asia especially in Taiwan and Korea with Japan, Singapore and Malaysia also beginning to look more active. Fortunately for LAM, Asia happens to be its region of strength. LRCX Poly and metal etch business in major Taiwan Fabs continue to look strong especially with new improved 9400 PTX poly etchers. Also New oxide etcher, EXELAN, is being accepted well and many systems in are evaluation. I believe that many of the evaluation systems will lead to additional orders. I belive that LRCX has successfully stopped market share loss in all etch segment and now in the position of taking share back from AMAT and TEL in Taiwan. 2)LRCX's CMP systems has been announced as a tool of record for Copper at TSMC sometime ago. Given that at TSMC, AMAT has a very strong presence and it has been working with TSMC on the developement of the copper process, the previous win at TSMC is truly significant for LRCX. UMC has been working with Copper Alliance (NVLS, LRCX, and SFAM) for the copper process developement. My feeling is that LAM is going to get some nice orders from UMC in the near future. The Copper war between TSMC and UMC has begun and LRCX should do well with the copper CMP orders now that it has a strong presence at both TSMC and UMC. 3) The situation in Korea looks quite interesting. I believe Samsung has just announced the equipment selection for the phase 1 of Fab 10 in Keung. I am not aware of all order decisions in all segments. However, I have been told that AMAT and LRCX surprisingly took majority of the orders in the oxide etch leaving TEL in the last place. I don't know if all LRCX's order was EXELAN vs. 4520 XLE but I hope that they were EXELAN's. If EXELAN performs well in Samsung for phase 1, I believe the larger order opportunity for phase 2 could be there for LAM. In addition, Hyundai is going to fill up and upgrade fabs now that the merger with LG is behind. Traditionally Tel's presence in LG fab was strong since LG fabs were exact copy of Hitachi fabs but now that the purchasing decision will be Hyundai management team, TEL's dominance in LG's fabs could vanish and LRCX and AMAT can secure more orders. But we will see what, in fact, develops... 4) The the major equipment companies especially AMAT and KLAC currently have record booking and highest gross margin in their history. Even though those companies' management are very competent, these companies earning growth will now just follow the overall industry growth given the limited upside with the gross margin and operational efficiency. However, LRCX has much more room for improvement in the area of gross margin and operational efficiency. These improvements coupled with faster than average revenue growth rate due to the market share gain in the oxide etch and CMP business will give a tremendous boost in LRCX's EPS. This, in turn, will lead to higher multiple allowing the share to appreciate faster than the competitors. I am hoping to witness this in January and March earning conference.