Jay, I hope this report, issued by SSB this morning,
answers your question. I have listened to the conference
call. The visibility for rest of this yr looks very good.
Picked up some shares this morning. Should use any
near term weakness to add to your position. I believe
business climate will accelerate towards the end of
this yr.
04/19/00 LAM Research Group (LRCX $48.87,1-H,Tgt $69.00) Glen Yeung
--SUMMARY:--LAM Research Group--Semiconductor Equipment
* Only slight upside to Street, reflecting one-time ERP implementation
impact
* Bookings surge tremendously over 25% sequentially
* New products continue to gain share
* Outlook for sequential bookings growth throughout CY00
* Pockets of strength in all regions
CY00 EPS to $1.69 from $1.62
CY00 Revenues to $1.59B from $1.50B
CY01 EPS to $2.11 from $2.03
CY01 Revenues to $2.09B from $1.95B
* Reiterate 1H rating
04/19/00 LAM Research Group (LRCX $48.87,1-H,Tgt $69.00) Glen Yeung
--EARNINGS PER SHARE--------------------------------------------------------
FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year
Actual 06/99 EPS $(0.23)A $(0.21)A $(0.13)A $0.09A $(0.48)A
Previous 06/00 EPS $0.19A $0.33A $0.37E $0.43E $1.32E
Current 06/00 EPS $0.19A $0.33A $0.37A $0.43E $1.33E
Previous 06/01 EPS $0.40E $0.43E $0.45E $0.52E $1.79E
Current 06/01 EPS $0.43E $0.45E $0.49E $0.52E $1.89E
Previous 06/02 EPS $N/A $N/A $N/A $N/A $N/AE
Current 06/02 EPS $0.54E $0.56E $0.57E $0.57E $2.24E
Footnotes:
04/19/00 LAM Research Group (LRCX $48.87,1-H,Tgt $69.00) Glen Yeung
--FUNDAMENTALS--------------------------------------------------------------
Current Rank........:1H Prior:No Change Price (04/18/00)....:$48.87
P/E Ratio 06/00.....:36.7x Target Price..:$69.00 Prior:No Change
P/E Ratio 06/01.....:25.9x Proj.5yr EPS Grth...:20.0%
Return on Eqty 99...:N/A% Book Value/Shr......:N/A
LT Debt-to-Capital(a)39.9% Dividend............:$N/A
Revenue (00)........:1230.20mil Yield...............:N/A%
Shares Outstanding..:N/Amil Convertible.........:No
Mkt. Capitalization.:N/Amil Hedge Clause(s).....:
Comments............:(a) Data as of the most recently reported quarter.
Comments............:
04/19/00 LAM Research Group (LRCX $48.87,1-H,Tgt $69.00)
--OPINION:------------------------------------------------------------------
Lam Research
3Q00(Dec) Operating Results
Actual LRCX Estimates Street 2Q00(Dec)A
Revenue $326M $330M $288.6M
Gross Margin 44.2% 44.0% 43.5%
Net income $54.4M* $51.1M $43.1M
Diluted Shares 146M** 139M 132M
EPS $0.37 $0.37 $0.36 $0.33
Bookings (Est.) $435M $400M $278M
*includes $3.2M for add back for conversion
**calculated as if convertible debt was converted
Source: Salomon Smith Barney, Company Data, First Call
REPORTS SOLID QUARTER. Lam reported 3Q00(Mar) EPS of $0.37, in line with
our estimate, and slightly ahead of the Street consensus of $0.36. While
we had thought additional upside potential was possible, the
implementation of an ERP system in the quarter (which caused the quarter
to be closed 2 weeks early) limited revenue upside. This was reflected
in revenues of $326M, slightly below our estimate of $330M.
ANOTHER STRONG BOOKINGS QUARTER. While revenues were slightly lower than
expected, bookings were higher. Bookings surged more than 25%
sequentially in the quarter, to over $435M by our estimates (we had
previously estimated $400M). Backlog now sits at record levels,
estimated to be close to $500M.
Lam Research 3Q00(Mar) Bookings and Billings
Bkings Billings B:B
US $114 $75 1.51
Europe $101 $104 0.96
Japan $61 $49 1.25
A/P $162 $98 1.65
TOTAL $437 $326 1.34
Source: Company Data
NEW PRODUCTS CONTINUE TO PERFORM. While no specifics were given, the
Company stated it believes it continues to gain share with its new oxide
etcher Exelan. In particular, the Company is confident it has gained
share in Asia (Taiwan and Singapore), Korea, and Japan. With Exelans
systems at major chipmakers in all those regions, we believe the Company'
s claims are more than justified.
On the CMP front, wins for new applications (STI and copper) are
supporting Teres performance. We anticipate news of additional Teres wins
over the course of the year. As the Company targets Teres at tungsten
and ILD applications, we believe the addressable market for Teres is
expanding. Lam continues to believe it can take 20% of total CMP
bookings by CY4Q00.
SEQUENTIAL BOOKINGS GROWTH FOR THE REST OF THE YEAR. With visibility
into 2H00 improving, we anticipate bookings growth is possible through
the rest of the calendar year. Regionally, we note the following:
USA: Capital budget increases at Intel should help Lam whose large
installed base, we believe, is seeing follow-on business from Intel's
addition of flash capacity. Moreover, continued progress at another
major US chipmaker should translate into CMP orders, also in 2H00.
Taiwan: Lam, and the industry, continues to benefit from aggressive
spending by the Taiwanese. We expect continued strength for the Company'
s new Exelan system, which we understand to be installed at both major
Taiwanese foundries. Notably Lam's CEO Jim Bagley stated that, while
spending in Taiwan was aggressive, it is unlikely that Taiwanese
foundries have enough capital to meet capacity requirements based on
current demand.
Europe: Lam has always had a strong position in Europe, and the capital
spending increase by ST Micro, one of Lam's strongest customers should
benefit the Company. ST continues to ramp Rousset where Lam has 100% of
the etch business as well as some clean business.
Japan: We continue to believe that Lam's CY00 revenues in Japan will
double from 1999 levels to over $100M. $61M in 3Q00(Mar) bookings more
than support this viewpoint. Continued penetration into major Japanese
accounts (particularly where new fab builds are anticipated) should
benefit Lam later in CY00, as new Japanese capital budgets are spent.
Korea: Lam has historically had a strong position at both DRAM players
in Korea. Recent sales of Exelan into Samsung's Fab 10, we believe, will
translate into follow-on orders as phase 2 of that facility places orders
during the summer or fall. Moreover, as Hyundai has yet to return to
aggressive spending, we anticipate some benefit to Lam's etch business.
ESTIMATES RAISED. We are raising our CY00 and CY01 estimates to
reflect: 1) slightly higher revenue growth; 2) increased gross margin
expansion 3)30% tax rate for both years. Our new estimates are as
follows:
FY01 EPS to $1.89 from $1.79
FY01 Revenues to $1.90B from $1.72B
CY00 EPS to $1.69 from $1.62
CY00 Revenues to $1.59B from $1.50B
CY01 EPS to $2.11 from $2.03
CY01 Revenues to $2.09B from $1.95B
CONCLUSION: Lam's quarter, like that of its peers, underscores what is a
very strong period for the industry. Lam's CEO Jim Bagley revised his
industry outlook to greater-than 50% growth for the industry to $26.5B,
in-line with our current estimate of $27.0B. Importantly, Lam's
visibility, particularly as it continues to qualify its new tools with
customers, is especially good. We believe sequential bookings growth for
the rest of the year is likely. We reiterate our 1H rating on Lam
Research. |
