LRCX: LAM Research Corp.

Lam is a leader in etch technologies to make the world's highest-per

Oct 12, 2006 Kirk Lindstrom

Lam Research (LRCX) is one of my favorite and most profitable investments. Learn more about Lam and my methods in the article and the attached discussion forum.

October 11, 2006

Lam is one of my favorite stocks. I jokingly call LRCX "Kirk's ATM" to reflect how successful I have been with Lam both as a long term investment and trading its volatility for added return.

I first started covering Lam Research here at Suite101 back in April 1998 in this post. I liked Lam because it was one of the leaders in etch technology, an area of semiconductor processing that I correctly believed would grow much faster than the overall market. I added LRCX to my newsletter Explore Portfolio in late 1998 at $3.33 per split adjusted share. Needless to say, at today's close of $48.12, Lam has been a great investment for me and my readers.

In early 1998, I had established a small position in the stock and, as is typical for how I invest, I was waiting for weakness to add significantly to my position. I made two more buys in 1998 at a split-adjusted price of $3.33 and $4.00. I still own some of those shares today in my personal, taxable account. Over the years, I've taken profits in my taxable account to pay some living expenses. I do most of my trading in my IRA where I can defer taxes until I take the money out in retirement. I will often trade five to ten percent of my shares around my core position several times per year for added return. Due to very large profits in the stock, I may have more tolerance for risk than a new investor so do your own due diligence before buying.

LRCX: LAM Research Corp

From the company website:

      "Founded in 1980, Lam Research Corporation is a major supplier of wafer fabrication equipment and services to the world's semiconductor industry. The Company's innovative etch technologies empower customers to build the world's highest-performing integrated circuits. Lam's etch systems shape the microscopic conductive and dielectric layers into circuits that define a chip's final use and function. The Company also offers a next-generation wafer cleaning solution, which employs proprietary technology and can be used throughout the semiconductor manufacturing process. Headquartered in Fremont, California, Lam maintains a network of facilities throughout the United States, Asia, and Europe to meet the complex and changing needs of its global customer base."

New Products:

  • Clean
  • Bevel-Clean
  • Next-Generation Patterning
  • Strip
  • MEMs
  • Productivity Enhancing Software Products

Revenue from all new products is expected to be approximately $100 million in CY2007.

More info on Lam Research:

Kirk's LRCX Disclaimer: I own LRCX at the time I am writing this article in my personal portfolio. I purchased Lam back in 1998 at a split adjusted price of $3.33 and $4.00 so I have plenty of room to take some risk trading its volatility on house money. I also, at the time of this article, have LRCX in my newsletter Explore Portfolio. I make no promises to tell you if I sell it ahead of time in either portfolio. Buy at your own risk and consult with your own investment advisor before doing so.

Free Charts and Other Stuff

Since beating the market is hard for most to do, I recommend a "Core and Explore" approach to investing. Core means place 80 to 99% of your money into a CORE, buy-and-hold, no load, mutual fund portfolio and then EXPLORE with the remainder. To build your core portfolio, I suggest a diversified basket of index funds.

I welcome more questions and suggestions for future articles at Kirk's Market Thoughts.

Kirk Lindstrom:

DISCLAIMER: Answers & my words are general in nature, are not meant as specific investment advice, and do not necessarily represent the opinion of anyone but Kirk. Individuals should consult with their own advisors for specific investment advice.

The copyright of the article LRCX: LAM Research Corp. in Investment is owned by Kirk Lindstrom. Permission to republish LRCX: LAM Research Corp. in print or online must be granted by the author in writing.

Comments

Oct 25, 2006 9:02 AM
duane f :
just got it in the mail and was looking through.

Am I the only one who is bothered by the extent of the share repurchase transactions?

From p18-19 I see that in the last FY $249M was spent on repurchasing. That's a huge chunk of change when NI for the year was $335M.

And at the end of it all you don't even keep up with share dilution.

Great if you're an exec of LAM. Bad if you're a shareholder.
Oct 25, 2006 3:34 PM
duane f :
Cisco's past year was unprecedented - $8.3B in stock buyback? Not pretty when you also take on $6.5B debt.

At least their shares out is moving in the right direction, down from 7.4B to 6.3B in a steady march over the past 5 yrs.

LRCX - Sure, I'd like a 4% dividend. At $2/share they can't afford it.

When I look at the Newberry filings it makes me ill.
http://yahoo.brand.edgar-online.com/default.aspx?cik=707549

$20M cash out year to date by my calculation. I wouldn't put much stock in the board given this arrangement.

Some day I'll find a solid company that isn't being looted.

I voted against also.
Jan 21, 2007 4:28 AM
Steve Thompson :
.
http://seekingalpha.com/article/24426
.
Feb 23, 2007 3:10 PM
Tim Trainor :
Lam up as much as $2.00 in after hours on news of a stock repurchase of $750 million in stock. Go LRCX!! I bought the recent weakness after selling all my previous shares in the low, mid and high 50's.
No wonder this stock is referred to as an ATM machine!
Apr 12, 2007 8:15 PM
Tim Trainor :
May be time to consider making a withdrawal from Kirk's ATM. LRCX beat estimates, and is now up a quick 20% from the recent lows. While at a PE of 12, it may be time to take a few thou off the table, in case of a market pullbsck. These cyclical stocks are wonderful! Thanks, Kirk.
What's really great is when you combine stocks like this one with other non-related cyclical stocks like the energy stocks. They do not move in tandem at ALL, so make for some serious diversification. For instance, pull up a chart of VLO, which was a raging buy at $48 only a few short months ago. AS IF oil is never going up again. Easy buy for me, that one was.
Now Mr Market rewarding these diverse, low PE, cyclical stocks at the same time. Think I may do a little celebrating this weekend!
Apr 13, 2007 8:08 AM
davey52 :
One heck of a bid under LRCX this morning. Would not be surprised of a green close.
Apr 15, 2007 6:51 AM
PEIC :
You were right. It went up.

Lam Research Gains While Analysts Debate Memory Demand

Posted on Apr 15th, 2007 with stocks: LRCX
http://chip.seekingalpha.com/article/32319?source=d_email&u=21547

Lam Research (LRCX) Thursday night reported solid numbers for its fiscal third quarter, beating the Street at both the top and bottom lines, and the stock got a modest lift Friday in response.

That said, there is an interesting debate going on about a comment the company made about demand for its equipment from the memory sector. The core issue is whether the memory sector - DRAM and NAND - can keep ramping up production in the face of declining prices. For Lam and others in the semiconductor equipment business, it is a key question, and one likely to come up over and over again as the sector reports first quarter results and looks into the rest of the year.

There seems to be a "glass-is-half-full, glass-is-half-empty" dynamic at work on the Street when it comes to this question. The half-full crowd latched onto Lam's comment that memory-related demand this year would be "smoother" than last year, implying more predictability. The half-empty crowd sees that as an admission that demand is flattening, if not faltering.

It's half full!

# Robert Maire, Needham: Management comments that memory spending was smoothing out over the year. In reality this means that the expectation of a June quarter up 25% over the March quarter will not happen as some of that revenue, about $60 million, has slipped into the September quarter. While some investors may balk at the slippage of revenue, we think it's no big deal as most investors had discounted the up 25% guidance as likely to slip when Lam gave the guidance at the end of last quarter.
# Mark Bachman, Pacific Crest: Some memory customers are pushing out tool deliveries from calendar Q2 into Q3, likely resulting in a 55%/45% split between first-half and second-half memory spending rather than the previously expected 65%/35% split...we are not concerned, as Lam's fundamentals have not changed.
# Patrick Ho, Stifel Nicolaus: We came away encouraged from the company's industry perspective over the next two quarters, particularly in terms of memory capex spending and shipments...it appears that the likely decline in memory capex that we have been forecasting may be more subdued than initially thought.

It's half empty!

# Suresh Balaraman, ThinkEquity: We believe investors could be underestimating the m
7 Comments