Lam Research Corporation
) reported second quarter fiscal 2013 non-GAAP earnings of 45
cents per share, meeting the Zacks Consensus Estimate.
Revenues of $860.9 million dropped 5.1% sequentially but grew
47.4% year over year. The year-over-year improvement was aided by
higher shipments, which indicated escalating demand for LRCX
Revenues by Geography
Revenue contribution from North America in the second quarter
was 24.0%, up from 18.0% in the prior quarter. Europe's
contribution was 8.0%, up 1% sequentially, while contribution
from Japan edged up from 7.0% in the prior quarter to 10.0%.
Contribution from Korea was 12.0% of the total revenue, down
from 24.0% in prior quarter; Asia Pacific was 20.0%, up from
15.0% in the first quarter of 2013 and Taiwan was 26.0%, down
from 28.0% in the September quarter of 2013.
Shipments were roughly $803.0 million during the quarter,
decreasing 14.1% from $935.0 million in the prior quarter.
Foundries accounted for 51% of total shipments, NAND 11%, DRAM
9.0%, with Logic and Others bringing in the balance.
From a geographical perspective, North America contributed
29.0% of second quarter fiscal 2013 shipments (18.0% in the first
quarter of 2013). Europe generated 9.0% (7.0% in the prior
quarter), Japan brought in 14.0% (8.0% in the prior quarter),
Korea contributed 12.0% (16.0% in the previous quarter), the Asia
Pacific contributed 14.0% (22.0% in the prior quarter) and Taiwan
accounted for 22.0% (29.0% in the September quarter).
The GAAP gross margin decreased 357 basis points (bps) year
over year to 36.6%. Lower volumes coupled with unfavorable
product and customer mix were the main reasons for the gross
Total operating expenses of $311.4 million were up 66.3% from
$187.3 million in the year-ago quarter. The operating margin was
0.47%, down 767 bps from 8.14% 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 made matters worse.
The GAAP net income was $6.4 million or 0.7% of sales,
compared with income of $33.2 million or 5.7% of sales in the
year-ago quarter. Reported earnings per share were 4 cents, down
from 27 cents in the prior-year quarter. After adjusting for
restructuring charges and impairment of long-lived assets on a
tax-adjusted basis, non-GAAP earnings were 45 cents in the
quarter compared with 34 cents in the year-ago quarter.
Inventories declined 6.5% sequentially to $530.3 million in
the second quarter. The company ended the quarter with cash, cash
equivalents and short-term investments of $2.5 billion, down from
$2.7 billion in the previous quarter.
Lam Research's long-term debt and capital lease balance was
$1.29 billion in the second quarter. Day sales outstanding (DSO)
were 62 days and inventory turns were 4.1X. Cash from operations
was $193.2 million in the second quarter, down from $249.3
million in the previous quarter. Capital expenditure in the
quarter was $38.9 million, down from the first quarter capex of
For the third quarter of 2013, Lam Research expects revenues
in the range of $800.0-$860.0 million. Shipments are expected to
be roughly in the range of $850.0-$910.0 million. Gross margin is
expected to be in the range of 42.5%-44.5% and operating profit
within a range of 6.5%-9.5%. Earnings are forecasted to be in the
range of 28 cents to 42 cents on a share count of 170.0 million.
The Zacks Consensus Estimate for the third quarter is pegged at
Lam Research delivered decent second quarter 2013 results with
the bottom line meeting the Zacks Consensus Estimate.
Year-over-year revenue growth on the back of strong product
demand was encouraging. However, the company's third quarter
guidance was weak, reflecting continued uncertainty in
Lam Research is well-positioned in the semiconductor equipment
segment and its closest peers in the segment are
ASML Holding NV
). It has further solidified its position with the addition of
Novellus Systems thin-film deposition and surface preparation
Lam Research has also entered into a strategic collaboration
Axcelis Technologies, Inc.
). We are optimistic about its prospects in non-oxidizing strip
applications for advanced memory and logic applications.
Lam Research has a Zacks Rank #3 (Hold).
AXCELIS TECH (ACLS): Free Stock Analysis
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ASML HOLDING NV (ASML): Free Stock Analysis
LAM RESEARCH (LRCX): Free Stock Analysis
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