So Far, Lam Not Sacrificial; CEO Says “Secular”

Lam Research (LRCX-NASDAQ) reported earnings of $1.15 diluted EPS and $650.3 million in revenues; estimates were $1.06 and $644.75M.  There was no guidance given.  Gross margin of $326.2 million for the March 2007 quarter met expectations at 50.2 percent compared to gross margin of $322.9 million, or 51.0 percent, for the December 2006 quarter.  Actual operating margin was noted as 29.1%.

LRCX shares were up more than 1% on the initial EPS number, but are now actually only up 0.5% because of no guidance.  Instead of making these CEO’s pay down to the penny the focus, maybe Wall Street should tell the companies that if they are going to give guidance then they should just do it in the actual earnings press releases.  There’s a thought, particularly since they aren’t exactly selling air-time like they are a radio or TV station.

Cash and cash equivalents balances were $1.5 billion, and cash flows provided by operating activities were $151.4 million during the quarter; LRCX repurchased approximately $239 million of its common stock during the quarter; Deferred revenue and deferred profit balances were $277.0 million and $166.1 million, respectively. The anticipated future revenue value of orders shipped to Japanese customers that are not recorded as deferred revenue was approximately $49 million.

The CEO also claims that recent activities ‘position Lam to serve a larger segment of the wafer fab equipment market that is benefiting from a favorable secular demand outlook for advanced integrated circuits.’   Shareholders may want to look at the word SECULAR that the CEO used.  He better hope that is the case, because ‘secular’ represents Very long-term in the financial markets.

Jon C. Ogg
April 12, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.