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

To: Jong Hyun Yoo who wrote (3719)	12/10/1999 9:31:00 AM
From: Kirk ©	Respond to of 5867

Thanks for the update! It is hard to tell using my tools at Fidelity (since most rations use Trailing 12 months), but LRCX seems to be still selling at a good 20% discount to the industry on P/B using most recent quarter data. Sound about right to you with your better data?

To: Jong Hyun Yoo who wrote (3719)	12/13/1999 11:02:00 AM
From: Proud_Infidel	Read Replies (1) \| Respond to of 5867

Japan's Winter PC Sales Expected to Post Record High December 13, 1999 (TOKYO) -- Personal computer sales in Japan in the third week of November increased both in units and value compared with the previous week, following the trend in past years as the year-end shopping season nears. Sales in the third week of November recorded an increase of more than 50 percent over the same period last year, although the figure did not reach the level of the first week of November, which was close to the peaks of the 1998 winter season and 1999 summer season. Sales after late November are expected to increase further when company employees receive their winter bonus. PC sales in the third week of November (Nov. 15-21, 1999) at approximately 2,000 volume retailers increased by 6.3 percent in units and 6.0 percent in value compared with the previous week, according to GfK Japan Ltd. GfK Japan is an information service company dealing with POS data of 55 household electric appliance retail stores. Compared with the same week the previous year (Nov. 16-22, 1998), units rose by 55.7 percent and value by 37.0 percent. The average retail price dropped by 712 yen to 203,220 yen from 203,932 yen a week earlier. (103.19 yen = US$1) Japan's PC retail market for this winter sales season has expanded product lines. low-priced desktop models joined the line-up of A4 notebook PCs which aroused demand in 1998, along with desktop PCs with LCD monitors. PC sales will surely surpass the past record for the peak period because they are 1.5 times higher than the previous year's period leading into the winter sales season. GfK Japan collects POS data from 55 IT-related retail sales companies centering on high-volume stores specializing in home electric appliances. It covers about 3,200 stores (as of April 1998) throughout Japan. In cooperation with GfK Japan, Nikkei Market Access provides weekly reports of PC sales in volume and value. The sales data has been based on the same 41 companies (with about 2,000 stores) since April 1996. The number of PCs sold at the 2,000 stores is estimated to comprise about 10 percent of gross domestic shipments, and when limiting the sales to the retail sales channel, the share comes to about 25 percent of such shipments.

To: Jong Hyun Yoo who wrote (3719)	12/14/1999 10:42:00 PM
From: Jong Hyun Yoo	Read Replies (1) \| Respond to of 5867

Portion of CSFB comments that might be of your interest: Etch market penetration and excellent outlook on CMP business that will drive up the revenue for the coming Q's Investment Summary LRCX is rated Buy. The increase in EPS estimates, and target price to $125, is a function of surging orders driven by the combined plusses of an industry- wide upturn and penetration gains in both etch and CMP. More vigorous top line expansion may yield leveraged EPS gains as operating efficiency builds. Both our F00 EPS projections of $3.20 and F01's $3.75 may be subject to further upside revision if penetration gains mount or operating leverage tops our forecast. Order prospects buttressed by renewed capacity investment Facing mounting yield issues at 0.18-micron (and even greater difficulties at 0.15-micron design rules) many IC firms are opting to boost new wafer starts and upgrade older lines as a means to add capacity. Tool intensive, the move is behind the upturn in process equipment orders that began in October and is apt to continue into Q2:00. For LRCX's etch business, this may generate double-digit sequential order growth over the next two quarters which could be amplified by share gains in the oxide market against its two Japanese competitors (LRCX's total etch bookings at Samsung line 10 was greater than the sum of Sumitomo and TEL's). With Hyundai (a traditional LRCX customer) poised to convert the LG lines (TEL and Sumitomo etch predominantly) to comparable process techniques next year, prospects for order growth in Korea is robust, as well as in Taiwan and Europe. CMP business may be reaching an inflexion point Two customers do not make a viable business, as was the case with LRCX's unsuccessful foray into CVD in the mid-1990's. By contrast, we suspect that LRCX could exit Q3 (March) with as many as six design wins (two in Taiwan, one in Japan and Europe, two in the U.S. including possibly Big Blue for copper CMP. Stated goals of a 20% share of CMP bookings by Q4:CY00 are not a stretch given that a) the TERES polisher is gaining ground in copper CMP applications (a fertile field, especially in Asia, and b) some smaller competitors appear to be stumbling in sub 0.18-micron applications, an opportunity for further share gain. Ultimately, we suspect that LRCX will emerge as the alternate North American supplier of CMP tools by dint of its solid performance, global field service organization, and balance sheet. Margin leverage apt to magnify bottom line gains Manufacturing margins in Q1 topped 41%, and we look for continues improvement over the next several quarters as management focuses on lowering factory overhead rates (now roughly 8%, can go to 6%) and installation and warranty expenses (two points of upside there as well). Management's longer term high 40% gross margin target may be difficult to achieve in an environment of three highly competitive suppliers of etch and CMP polishers. Discretionary spending is not apt to match the pace of revenue growth, and we look for 100- 200 basis point sequential improvement in operating margins continuing into F01. With variable operating margins above 35%, operating leverage is huge at LRCX as, on a full taxed basis, an incremental $100MM in sales can add between $0.40 to 0.50 to EPS.

To: Jong Hyun Yoo who wrote (3719)	12/14/1999 10:47:00 PM
From: Jong Hyun Yoo	Read Replies (1) \| Respond to of 5867

Comments by SSB after their recent trip to Asia: BBS rates LAM as the company with the most value among the semi-equipments stocks.. --SUMMARY:----Semiconductor Equipment Our Asian trip indicates significant upsides to Taiwan cap. ex. forecast (45%-50% growth during 2000 versus our prior estimate of 29%), good upsides to Japan spending (up 26% in 1999 versus our forecast of 7%, and up 22% in 2000, versus our forecast of 28%) and an in-line Korea. Equipment companies likely to report December quarter reasonably ahead of expectations, which should provide near term support to valuations with 15%-20% upsides. The main medium-to-long term question for these stocks is the perceived supply/demand balance during 2000, for which we expect to get data points during early 2000. --OPINION:------------------------------------------------------------------ Please refer to the Taiwan note from 12/7, Korea note from 12/9, and our conference call presentation for more details. We just completed an Asian field trip with stops in Taiwan, Korea and Japan. The capital spending outlook from Taiwan is significantly better than expectations, Japan was appreciably better than expectations with Korean spending in-line. This translates to a worldwide capital spending growth of 13.5% during 1999 (versus our prior model of 10.5%) and 31.6% during 2000 (versus our prior model of 29.2%). Most equipment companies such as AMAT, LRCX, KLAC and NVLS are forecasted to grow 30%-40% next year, so these top-down capital spending figures give us increased confidence in our bottom-up company growth forecasts. Based on 2001 valuations metrics we see 5%-10% upside from the current levels. However, with a good December quarter earnings report, we believe that the 2001 forecasts will likely be revised higher by roughly 10%, which then translates to upsides of 15%-20% from the current levels. However, by no means is supply growth trivial. We believe that the wafer fab equipment market will post a growth of 14%-15% during 1999 (as compared to a semiconductor industry growth of 15%-16%, SSB Jon Joseph forecast) and a growth rate of at least 25% during 2000 (as compared to a semiconductor industry growth of 25%, SSB forecast). Unlike 1999, when we were enjoying the fruits of a 23% contraction in the equipment market during 1998, 2000 appears to be a year, when the supply/demand balance will need to be keenly watched. In this environment, we would focus on specific opportunities such as Lam Research (LRCX, 1H, Price Target - $98, $87 3/8) and Etec Systems, the former providing an upside potential not yet discounted by the Street, and the latter would be a participant of the mask industry growth expected during 2000. Lam Research trades at 20-21 times calendar 2001 earnings, as compared to the mid-20's multiple given to other front-end equipment companies. More importantly, we believe that Lam's operating margin assumption of 19.5% during 2001, leaves significant room for upside potential thus providing solid upsides. While prior upturns were mainly driven by the PC and would hence drive advanced linewidths, the current upturn is being driven by a wide variety of applications such as the PC, cellular, flash memories and other consumer devices. Apart from the PC, we believe that a significant proportion of the other devices utilize linewidths 1-2 generations behind the current state of the art - 0.18 micron (and we saw ample evidence of that during our trip). This explains the lack of participation by the photomask sector during the current upturn, but conversely also implies that during 2000, as the other applications catch up to 0.18 micron, the mask sector should embark on a solid recovery. We believe that Etec Systems (ETEC, 1H, Price Target - $64, $42 3/4 ) is an excellent way to play the recovery of this sector.