Lam Research Corporation
) reported first quarter fiscal 2013 non-GAAP earnings of 53
cents per share, handily beating the Zacks Consensus Estimate of
41 cents by 29.3%. The beat, which could be attributed to strong
revenue growth, led the share price to hike 1.0% in the
Lam Research's revenue of $906.9 million grew 22.3%
sequentially and 33.3% from a year ago. The year-over-year
improvement was aided by higher shipments, which indicated
escalating demand for LRCX product suites.
Revenue by Geography
Revenue contribution from North America in the first quarter
was 18.0%, up from 12.0% in the prior quarter. Europe's
contribution remained flat sequentially at 7.0%, while
contribution from Japan edged up from 7.0% in the prior quarter
to 8.0%. Contribution from Korea was 24.0% of the total revenue,
down from 39.0% in prior quarter, Asia Pacific was 15.0%, up from
10.0% in the fourth quarter of 2012 and Taiwan was 28.0%, climbed
from 25.0% in the fourth quarter of 2012.
Revenue by Shipments
Shipments were roughly $935.0 million during the quarter,
increasing 14.6% from $816.0 million in the prior quarter.
Foundry shipment accounted for 48.0% of total shipment to $448.8
million, NAND $205.7 million, DRAM $177.65 million, Logic $93.5
million and Others accounted for rest $9.35 million.
From a geographical perspective, North America contributed
18.0% of first quarter fiscal 2013 shipments (14.0% in fourth
quarter of 2012), Europe generated 7.0% (6.0% in the prior
quarter), Japan brought in 8.0% (flat sequentially), Korea
contributed 16.0% (32.0% in the previous quarter), Asia Pacific
contributed 22.0% (12.0% in the prior quarter) and Taiwan
accounted for 29.0% (28.0% in the previous quarter).
The GAAP gross margin decreased 490 bps year over year to
36.8%. Lower volumes coupled with unfavorable product and
customer mix were the main reasons for the gross margin
Total operating expenses of $317.2 million were up 71.9% from
the year-ago quarter's $184.5 million. The operating margin was
1.8%, down 1280 bps from 14.6% recorded in the previous-year
quarter. Both research and development and selling, general and
administrative expenses increased as a percentage of sales, and
the lower gross margin was an offsetting factor.
The GAAP net income was $2.8 million, or 0.3% of sales,
compared with income of $71.8 million, or 10.6% in the year-ago
quarter. Reported earnings per share were 2 cents, down from 58
cents in the prior year quarter. After adjusting for
restructuring charges and impairment of long-lived assets on a
tax-adjusted basis, the non-GAAP came to 2 cents in the quarter,
compared with 58 cents in the year-ago quarter.
Inventories declined 10.3% sequentially to $567.9 million in
the first quarter. The company ended with cash, cash equivalents
and short-term investments of $2.7 billion, down from $2.9
billion in the previous quarter. Lam Research's long-term debt
and capital lease balance was $1.3 billion in the first quarter.
Day sales outstanding (DSO) were 64 days and inventory turns were
4.0X. The cash from operations were $249.3 million in the first
quarter, up from $96.7 million in the previous quarter.
Lam Research guided for a weak second quarter as some of its
customers lowered their spending plans.
For the second quarter 2013, Lam Research expects revenue in
the range of $820.0-$880.0 million. Shipments are expected to be
roughly in the range of $770.0-$830.0 million. The gross margin
is expected to be in the range of 43.0%-45.0% and operating
profit at 9.5%-12.5%. Earnings are forecasted to be in the range
of 38 cents -52 cents on a share count of 172.0 million shares.
Zacks Consensus Estimate for the second quarter is pegged at 50
The company also lowered its wafer fabrication
equipment-spending outlook for the remainder of 2012.
Lam Research delivered impressive first quarter 2013 results
with the bottom line surpassing the Zacks Consensus Estimate.
Year over year revenue growth was encouraging, citing strong
product demand. But the company's second quarter guidance was
sequentially weak, reflecting uncertainty of semiconductor
Lam Research is well-positioned in the semiconductor industry
and is giving tough competition to the key players such as
), Tokyo Electron and
ASML Holding NV
). It has further solidified its position with the addition of
Novellus Systems Inc.'s thin-film deposition and surface
preparation product lines.
Despite its growth prospects, we assign the stock a Zacks #5
Rank, implying a short-term "Strong Sell" rating on the back of
weak second quarter guidance and lackluster demand situation in
the semiconductor market.
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