Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Cary Salsberg who wrote (5241)	2/18/2005 4:29:44 PM
From: Jong Hyun Yoo	Read Replies (3) \| Respond to of 5867

Hi Cary, RE: "By check indicates AMAT had very poor gross margin with the Etch product and I am deducing from this fact that AMAT had more product sold for non-critical applications." Where do you go to find AMAT's gross margins on etch and can you quantify "very poor gross margin"? I have some industry contacts. But you don't have to contacts to find this info out as you can deduce from latest performance metric. OK. Let us look at the average gross margin of LRCX and AMAT for their latest Q's. LRCX AMAT Revenue $379.8 $1781 Gross Margin 52.4% 41% Operating Margin 28.6% 21% The biggest revenue generator for AMAT is PVD, MOCVD, HDPCVD, PECVD, CMP, Etch, Cu electroplating/barrier seed. PVD business has a terrific gross margin. At one point, this business had gross margin nearing high 60%. With 300 mm tools, the gross margin trended down initially but with all the cost reduction activities, the gross margin should be still very good. CVD business has a lower gross margin than the PVD business due to competitions from NVLS. But the DSM group (most of the CVD applications) runs with highest efficiency as it generates the highest revenue number per employee basis. I suspect that the gross margin should be in the north of 50% for most of the CVD applications (with exception to WCVD but the revenue number is really small here). With CMP, AMAT has a monopoly. When you have a monopoly, you know you have a pricing power and natually high gross margin is generated. ECP and barrier seed, AMAT has made some inroad against the NVLS especially with SlimCell at sub-90 nm processing. But gross margin could be lower than the average number but should be farly colse to that number. This means one segment of the business was really bad to bring down the gross margin number down to 41% from what it could have been around high 40% to low 50%. I suspect that Etch has been the culprit. I expect AMAT Etch to have generated revenue number somewhere in the range of 250 to 280 mil and the gross margin could have been substantially below the average number for this amount of revenue to have significant gross margin lowering impact. yes AMAT also have service revenue which may have lowered gross margin. And the service business may have contributed to lower gross margin. Despite the two fierce competitors (Tel and AMAT) in the Etch business, LRCX posted record gross margin and op ex number. Better gross margin may have resulted from cost reduction activities but better pricing for LRCX's product also may have played role there.. JHY